The law of diminishing marginal product states that
A) output will continue to increase indefinitely if more variable factors of production are added to an existing stock of fixed factors.
B) successive equal-sized increases in labor, when added to fixed factors of production, will result in smaller increases of output.
C) a doubling all inputs will double output.
D) variable costs tend to decrease with output.

Question

Quizplus · Accepted Answer

The law of diminishing marginal product states that successive equal-sized increases in a variable input, such as labor, when added to a fixed input, such as capital or land, will result in smaller and smaller increases in output. This is due to factors such as diminishing returns to scale and limited resources. Choice A is incorrect because output will eventually reach a point of saturation due to limited resources or technological constraints. Choice C is incorrect because output may increase by less than double or more than double when inputs are doubled, depending on the specific production function. Choice D is incorrect because variable costs may actually increase with output due to factors such as diminishing returns to scale or variable input costs.

The Law of Diminishing Marginal Product States That