When an additional unit of a variable input adds less to total product than the previous unit, the firm must be experiencing:
A)increasing returns.
B)diminishing marginal returns.
C)diminishing total returns.
D)diminishing marginal returns and diminishing total returns.

Question

Quizplus · Accepted Answer

Diminishing marginal returns occur when each additional unit of a variable input adds less to total product than the previous unit. This indicates that the productivity of the variable input is decreasing, which is also referred to as diminishing marginal productivity.

When an Additional Unit of a Variable Input Adds Less