Q.

The law of diminishing returns states that:

A. as a firm uses more of a variable resource, given the quantity of fixed resources, the average product of the firm will increase
B. as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease
C. in the short run, the average total costs of the firm will eventually diminish
D. in the long run, the average total costs of the firm will eventually diminish
Answer» B. as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease
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MicroEconomics, Theory and Applications 1

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