Diminishing marginal returns means that the firm definitely is experiencing
A) diseconomies of scale.
B) constant returns to scale.
C) Both answers A and B are correct.
D) Neither answer A nor B is correct.

Question

Quizplus · Accepted Answer

Diminishing marginal returns occur when adding an additional factor of production results in a smaller increase in output. This concept is related to the short-run production process and does not necessarily imply diseconomies of scale or constant returns to scale, which are long-run concepts.

Diminishing Marginal Returns Means That the Firm Definitely Is Experiencing