Question

The law of diminishing returns operates when _______________.

• A. the factors have been combined in wrong proportions
• B. the factors have been combined in right proportions
• C. are used fully indivisible factors
• D. there is scientific cultivation

Answer 1

The correct option is A the factors have been combined in wrong proportions

The law of diminishing returns states that as one input variable is increased, there is a point at which the marginal increase in output begins to decrease, holding all other inputs constant.
This does not mean that output decreases; output begins to increase at a decreasing rate for each additional unit of input.