Holding all factors constant except one and increasing a variable factor is expected to lead to steadily decreased marginal product of that factor, this is an example of ?
Correct answer: B. The law of diminishing returns
- A. decreasing returns to scale
- B. The law of diminishing returns
- C. constant returns to scale
- D. an inefficient production technique
Explanation
When other inputs are fixed and additional units of one variable input eventually add less to output, the law of diminishing returns is operating. Returns to scale instead concern changing all inputs together.
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