If equal increments of one variable input are added while keeping the amounts of all other inputs fixed, and decreasing additions to total product begin, then:
A) diminishing marginal returns have begun.
B) the firm is employing the least cost combination of inputs.
C) returns to scale are constant.
D) returns to scale are decreasing.
E) returns to scale are increasing.

Question

Quizplus · Accepted Answer

The scenario described is the classic example of the law of diminishing marginal returns, where adding more units of a variable input results in smaller and smaller increases in total product.

If Equal Increments of One Variable Input Are Added While