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Q: Which of the following law states that "as more and more units of a variable factor are employed with fixed factors and technology, its marginal product eventually declines."
  • A. The marginal rate of technical substitution
  • B. The law of diminishing returns to a factor
  • C. The law of variable proportions
  • D. Law of diminishing marginal utility
Correct Answer: Option B - The law of diminishing returns is an economic principle stating that as investment in a particular area increases, the rate of profit from the investment, after a certain point, can't continue to increase if other variables remain constant.
B. The law of diminishing returns is an economic principle stating that as investment in a particular area increases, the rate of profit from the investment, after a certain point, can't continue to increase if other variables remain constant.

Explanations:

The law of diminishing returns is an economic principle stating that as investment in a particular area increases, the rate of profit from the investment, after a certain point, can't continue to increase if other variables remain constant.