A firm experiences diminishing marginal returns because
A) all factors of production are variable.
B) people "learn by doing."
C) all factors of production are fixed.
D) at least one factor of production is fixed.

Question

Quizplus · Accepted Answer

Diminishing marginal returns occur when at least one factor of production is fixed, while others are variable. As more units of the variable factor are added to the fixed factor, there is a reduction in the marginal product of the variable factor, leading to diminishing marginal returns.

A Firm Experiences Diminishing Marginal Returns Because