Question

As per the Law of Diminishing Returns, fixed factor becomes inadequate because ____________.

• A. It is scarce
• B. It has no perfect substitutes
• C. Both A and B
• D. Neither A nor B

Answer 1

Answer: (C)

Both A and B

As per the Law of Diminishing Returns, Fixed Factor becomes inadequate because -

a) It is scarce

b) It has no perfect substitutes

Law of variable proportions is also known as the law of law of diminishing returns. This law shows the production function with one input factor variable while keeping the other input factors constant.