Q. Under the law of diminishing returns, a gain in output will: increase at a decreasing...

Q. Under the law of diminishing returns, a gain in output will:

increase at a decreasing rate.
decrease at a decreasing rate.
decrease at an increasing rate.

Expert Solution

Law of diminishing return is a concept of economics under which there comes a point after which increase in one factor of production (keeping other factors constant) will increase the total output at decreasing rate.

This implies that after a point addition of one more unit of factor causes relatively less increase in total output that its predecessor. After a particular point although total output will increasing, however marginal output and average output will decrease.

This could be understood by a example:

As more and more labors are employed to work on a fixed sized field, initially the production will increase at increasing rate as more labors. But after a point law of diminishing returns will take over, and each new worker will contribute less than previous worker. Although the total production will be increasing. This is law mainly works in short run because in long run other factors can also be varied.

Hence Answer is

Under the law of diminishing returns, a gain in output will:

increase at a decreasing rate.

jeff jeffy answered 1 year ago

explain the Law of diminishing returns.

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