The law of diminishing returns begins at the level of output where
A) marginal cost is at a minimum.
B) average variable cost is at a minimum.
C) average fixed cost is at a maximum.
D) None of the above is correct.

Question

Quizplus · Accepted Answer

The law of diminishing returns starts to take effect at the point where marginal cost begins to increase, which happens when the output level is such that adding more of one factor of production (while keeping others constant) results in a smaller increase in output. This point is typically where the marginal cost is at its minimum, after which it starts to rise.

The Law of Diminishing Returns Begins at the Level of Output