Question

The law of diminishing returns says that when some factors of production are fixed:

a) total utility eventually falls as consumers purchase more of a good.

b) total revenue decreases as output increases, holding technology fixed.

c) increased production of the good eventually requires ever-larger increases in the variable factor.

d) opportunity costs increase as production of one good increases.

Answer 1

The law of diminishing return refers as the decrease in marginal output due to increasing any variable factors. It means if any firm want to produce more output then there is required more input compare to previous input which has been used for the production.

Hence it can be said that according to law of diminishing return when some factors are constant, then in this circumstances increased production of the good requires ever larger increase in the variable factors.

Hence option (c) is the correct answer.