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Q: Which law states that "if we keep increasing the employment of an input, with other inputs fixed, eventually a point will be reached after which the resulting addition to output will start falling"?
  • A. Law of Increasing Profit Generation
  • B. Law of Production
  • C. Law of Variable Proportions
  • D. Law of Diminishing Marginal Product
Correct Answer: Option D - The law of diminishing marginal product states that there comes a point when an additional factor of production results in lessening of output or impact. The law of diminishing marginal product is an economic rule governing production which holds that if more variable input units are used alongwith a certain amount of fixed inputs, the overall output might grow at a faster rate initially then at a steady rate but ultimately it will grow at a declaring rate.
D. The law of diminishing marginal product states that there comes a point when an additional factor of production results in lessening of output or impact. The law of diminishing marginal product is an economic rule governing production which holds that if more variable input units are used alongwith a certain amount of fixed inputs, the overall output might grow at a faster rate initially then at a steady rate but ultimately it will grow at a declaring rate.

Explanations:

The law of diminishing marginal product states that there comes a point when an additional factor of production results in lessening of output or impact. The law of diminishing marginal product is an economic rule governing production which holds that if more variable input units are used alongwith a certain amount of fixed inputs, the overall output might grow at a faster rate initially then at a steady rate but ultimately it will grow at a declaring rate.