The ____ states that when multiple resources are required to produce something useful, adding more of a single resource produces fewer benefits.
A) law of regression
B) law of diminishing returns
C) law of diminished value
D) law of diversity

Question

Quizplus · Accepted Answer

The law of diminishing returns states that as more and more units of a variable input (such as labor or capital) are added to a fixed quantity of other inputs (such as land), the total output will first increase at an increasing rate, then increase at a decreasing rate, and eventually reach a point where further increases in the variable input will lead to smaller and smaller increases (or even decreases) in the total output. This occurs because of the limited capacity of the fixed inputs to absorb increasing amounts of the variable input, leading to inefficiencies and diminishing returns to scale.

The ____ States That When Multiple Resources Are Required to Produce