The law of decreasing returns states that as a firm uses more of a A) variable input, total output will increase indefinitely. B) variable input, with a given quantity of fixed inputs, the marginal product of the variable input eventually decreases. C) fixed input, with a given quantity of variable inputs, the marginal product of the fixed input eventually decreases. D) variable input, output will begin to fall immediately.

The law of decreasing returns states that as a firm uses more of a A) variable input, total output will increase indefinitely. B) variable input, with a given quantity of fixed inputs, the marginal product of the variable input eventually decreases. C) fixed input, with a given quantity of variable inputs, the marginal product of the fixed input eventually decreases. D) variable input, output will begin to fall immediately.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter10: Cost Functions

Section: Chapter Questions

Problem 10.4P

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

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The law of decreasing returns states that as a firm uses more of a
A) variable input, total output will increase indefinitely.
B)
variable input, with a given quantity of fixed inputs, the marginal product of
the variable input eventually decreases.
fixed input, with a given quantity of variable inputs, the marginal product of
the fixed input eventually decreases.
D) variable input, output will begin to fall immediately.

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