Diminishing marginal returns occur when:
A) each additional unit of a variable factor adds more to total output than the previous unit.
B) an additional variable factor adds less to total output than the previous unit.
C) the marginal product of a variable factor is increasing, but at a decreasing rate.
D) all of the above are true.

Question

Quizplus · Accepted Answer

Diminishing marginal returns occur when each additional unit of a variable factor adds less to total output than the previous unit. This means that there is a decline in marginal productivity, where the additional units of the variable factor are becoming less effective in increasing total output.

Diminishing Marginal Returns Occur When