The Law of Diminishing Marginal Returns

question 139

Multiple Choice

The law of diminishing marginal returns

• A)sets in because not all workers are equally productive.
• B)applies only in the short run.
• C)holds even when there are no fixed factors.
• D)ultimately explains why production displays diseconomies of scale.

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Definitions:

Long-Run Average Cost

The per-unit cost of production in the long run, where all inputs are variable and economies of scale have been reached.

Marginal Cost

The cost incurred in producing one additional unit of a product or service.

Average Total Cost

The sum of all production costs divided by the quantity of output produced, representing the per-unit cost of production.

Mixers

Devices used for mixing components; in an economic context, could refer to firms or gadgets blending products in the market.