Diminishing marginal returns occur when:
A)each additional unit of a variable factor adds more to total output than the previous unit.
B)an additional variable factor adds less to total output than the previous unit.
C)the marginal product of a variable factor is increasing but at a decreasing rate.
D)total product decreases.

Question

Quizplus · Accepted Answer

Diminishing marginal returns occur when adding an additional unit of a variable factor adds less to the total output than the previous unit. This means that there is a decrease in the marginal product of the variable factor. Option A describes increasing marginal returns, while option C describes increasing but decreasing marginal returns. Option D describes negative marginal returns, which is not the concept of diminishing marginal returns.

Diminishing Marginal Returns Occur When