2019 · Q11
According to the Law of Diminishing Returns, in a production function when more and more units of the variable factor are used, holding the quantities of a fixed factor constant, a point is reached beyond which
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- Athe marginal revenue will diminish
- Bthe average revenue will diminish
- Cthe marginal product will diminish
- Dthe marginal product will increase
Explanation
The Law of Diminishing Returns (diminishing marginal product) states that as more units of a variable input are added to fixed inputs, the marginal product of the variable factor eventually declines. It concerns physical output (marginal product), not revenue curves. So the correct completion is C.