The Law of Diminishing Returns States That If Increasing Quantities

question 54

Multiple Choice

The law of diminishing returns states that if increasing quantities of a variable factor are applied to a given quantity of fixed factors,then

• A)the MP and the AP of the variable factor will eventually decrease.
• B)the MP will eventually decrease with constant AP.
• C)the AP will eventually decrease with constant MP.
• D)the AP will eventually decrease,but only if TP is held constant.
• E)TP will eventually begin to fall.

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Definitions:

Demand Curve

The graphical representation that illustrates the quantity of a particular good or service that consumers are willing and able to purchase at various price points.

Vertical Demand Curve

A vertical demand curve is a theoretical representation where the quantity demanded is completely insensitive to price changes, indicating that consumers are willing to buy the same amount regardless of the price.

Elasticity

A measure of how much the quantity demanded or supplied of a good or service changes in response to a change in price, income, or other factors.

Perfectly Elastic

A situation in demand or supply where the quantity demanded or supplied changes by an infinite amount in response to any change in price.