Question

Law of diminishing returns operates when ______________.

• A. one factor is kept constant while the others are increased
• B. one factor is variable while the others are kept constant
• C. one factor is variable while the other are decreased
• D. none of these

Answer 1

The correct option is B one factor is variable while the others are kept constant

Law of diminishing returns operates when one factor is variable while others are kept constant.

As a result with more and more additional unit of the variable factor the marginal productivity of variable factor increases at a diminishing rate.