Chapter 10R, Problem 9MCQ

To determine

Diminishing marginal returns

Answer to Problem 9MCQ

(d) a fixed input.

Explanation of Solution

To observe the diminishing returns to an input, the other inputs are considered fixed. In such a condition the marginal product of the input is declining. Hence, option (d) is correct.

Option (a), (b), (c), and (e) are incorrect because in these cases there is the scope of variable input as all input can be increased so marginal return would not get diminished.

Economics Concept Introduction

Introduction:

The conditions for diminishing marginal returns of input are observed when all the other inputs are fixed and the quantity of one input is increased. In such conditions, as the quantity of variable input is increased, the contribution of an additional unit of a variable input is declining. This results in diminishing marginal returns.