Diminishing marginal returns occur because
A) average and marginal relationships behave very differently with respect to each other.
B) the efficiency of variable resources depends on the quantity of the fixed resources.
C) producers are not careful enough in the manufacturing process.
D) workers are lazy and inefficient.
E) workers in some industries lack an adequate formal education.

Question

Quizplus · Accepted Answer

Diminishing marginal returns occur because the efficiency of variable resources depends on the quantity of the fixed resources. As more and more units of a variable resource are added to a fixed resource, the additional output produced by each additional unit of the variable resource eventually decreases, leading to diminishing marginal returns.

Diminishing Marginal Returns Occur Because