The observation that beyond some point, successive increases in a variable factor of production added to a fixed factor of production lead to smaller and smaller increases in output is
A) the law of marginal utility.
B) the law of averages.
C) the law of diminishing marginal product.
D) the law of opportunity costs.

Question

Quizplus · Accepted Answer

The observation described is the law of diminishing marginal product, which states that as more units of a variable factor of production (such as labor) are added to a fixed factor of production (such as capital or land), the marginal product of the variable factor will eventually decline. This occurs because the fixed factor becomes a bottleneck in the production process, limiting the amount of output that can be produced even as more of the variable factor is used.

The Observation That Beyond Some Point, Successive Increases in a Variable