The point of saturation occurs when a firm
A) has total returns equal to zero.
B) first encounters negative marginal product.
C) first experiences positive marginal product.
D) maximizes its total returns.

Question

Quizplus · Accepted Answer

The point of saturation occurs when a firm first encounters negative marginal product, which means that the additional output produced from each additional unit of input decreases. This indicates that the firm has reached its production capacity and any further increase in input will result in a decrease in output.

The Point of Saturation Occurs When a Firm