-Refer to Table 5.2. Following which unit of output does the law of diminishing marginal returns cause per-unit costs to increase?
A) 1
B) 4
C) 6
D) 7
E) None; the law of diminishing marginal returns does not apply.

Question

-Refer to Table 5.2. Following which unit of output does the law of diminishing marginal returns cause per-unit costs to increase?
A) 1 
B) 4 
C) 6 
D) 7 
E) None; the law of diminishing marginal returns does not apply.

Quizplus · Accepted Answer

The law of diminishing marginal returns states that as more units of a variable input are added to a fixed input, the marginal product of the variable input will eventually decrease. This means that the output per unit of input will decrease, and the per-unit costs will increase. In Table 5.2, the per-unit costs start to increase after unit 6 of output.