Question

If Wayne Enterprises produces less additional output with each additional unit of input, holding all other inputs constant, their production function is exhibiting

Group of answer choices

constant returns.

negative returns.

increasing returns.

diminishing returns.

Answer 1

Law of Diminishing Returns

Law of diminishing returns states that when more and more units of the variable factor are employed with fixed factors, then the marginal product of the variable factor falls.

Basically in diminishing returns, output increase but at a decreasing rate

For example

Variable Factor	Output	Marginal Product
1	12	12
2	22	10
3	30	8
4	36	6

Marginal product is the additional output produced by adding additional units of variable factor.

Hence option D is correct