Question

The "law of diminishing returns" applies to _________.

• A. the short run, but not the long run
• B. the long run, but not the short run
• C. both the short run and the long run
• D. neither the short run nor the long run

Answer 1

Answer: (A)

the short run, but not the long run

For the law of diminishing return to operate at least one factor needs to be fixed, as only then can factor proportions be changed, this happens in the short run. In the long run all factors are variable and thus it is not possible for the law of diminishing returns to operate.