Question

David wants to know what the law of diminishing returns. You would tell David that it exists: A. Population growth automatically adjusts to that level at which the average product per worker will be at a maximum. B. As successive amounts of one factor of production (labour) are added to flexible amounts of other factors of production (property), beyond some point the resulting extra output will decline. C. All of the other answers are incorrect D. Because large-scale production allows the realization of economies of scale, the real costs of production vary directly with the level of output. E. Proportionate increases in the inputs of all factors of production will result in a less-than-proportionate increase in total output.

Answer 1

B. As successive amounts of one factor of production (labour) are added to flexible amounts of other factors of production (property), beyond some point the resulting extra output will decline.

Diminishing retuens to scale refers to the situation or point after which increase in input leads to increase in output at decreasing rate as shown in the below diagram, the second phase shows diminishing returns.