Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It increases indefinitely
B
It decreases after a certain point
C
It remains constant
D
It becomes negative
Understanding the Answer
Let's break down why this is correct
Answer
Diminishing marginal returns occur when adding more of a certain input, like labor, leads to smaller increases in output after a certain point. For example, imagine a farmer who has a fixed amount of land and starts hiring workers. At first, each new worker helps produce a lot more crops because they can work together efficiently. However, as more workers are added, they start getting in each other’s way, and each additional worker contributes less to the total harvest. This means that while the total output may still rise, the extra output from each new worker decreases, showing diminishing returns.
Detailed Explanation
As you add more of one input, like workers, the extra output they create starts to go down. Other options are incorrect because Some might think that adding more input always increases output; It's a common mistake to believe that adding more input keeps output the same.
Key Concepts
marginal product
Topic
Diminishing Marginal Returns
Difficulty
easy level question
Cognitive Level
understand
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