Given constant quantities of all other factors of production, when additional units of a variable factor of production add less and less to total output, then the firm is experiencing:
A) constant marginal returns.
B) increasing marginal returns.
C) diminishing marginal returns.
D) negative marginal returns.

Question

Quizplus · Accepted Answer

Diminishing marginal returns occur when the addition of each unit of the variable factor of production leads to a smaller increase in total output. This happens because the factors of production become less complementary as more units of the variable factor are added, leading to inefficiencies and diminishing returns.

Given Constant Quantities of All Other Factors of Production, When