The law of diminishing marginal returns states that:

A Returns always increase

B As additional units of a variable input are added to fixed inputs, the marginal product eventually decreases

C Total output decreases

D Costs always decrease

✓ Correct Answer: Option B

Diminishing marginal returns: holding other inputs constant, each additional unit of a variable input eventually contributes less to output. Key short-run production concept.

💡 Why is B) the correct answer?

The correct answer to the question "The law of diminishing marginal returns states that:" is Option B: As additional units of a variable input are added to fixed inputs, the marginal product eventually decreases.

The other options — A) Returns always increase, C) Total output decreases, D) Costs always decrease — are incorrect for this Pre-MBA Exam Prep question. As explained above: Diminishing marginal returns: holding other inputs constant, each additional unit of a variable input eventually contributes less to output. Key short-run production concept.

📚 About This Pre-MBA Exam Prep Practice Question

This 2-level Pre-MBA Exam Prep question from the Economics topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free Pre-MBA Exam Prep practice test or use flashcards for spaced repetition review.

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The law of diminishing marginal returns states that:

✓ Correct Answer: Option B

📚 About This Pre-MBA Exam Prep Practice Question

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