The law of diminishing returns states that, in the short run, adding more of a variable factor to a fixed factor eventually leads to
Answer and explanation
Correct answer: B. a fall in the marginal product of the variable factor
- Step 1: Each extra worker adds less than the one before, once the fixed factor is crowded. Answer: a fall in the marginal product of the variable factor. Why not the others: a rise in the marginal product: That is true only at the start. a fall in the fixed cost: Fixed cost does not change with output. a rise in total product forever: Total product eventually grows slower and may fall.
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More Production, costs and market structures questions
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