Question

negative marginal return occur due to .....

A) relative abundance of variable factor
B) relative abundance of fixed factor r
C) relative scarcity of variable factor
D) none of above​

Answer 1

B) relative abundance of fixed tractor r

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Answer 2

• Negative marginal returns occur due to the relative abundance of the variable factor.
• Negative marginal return means that with an additional unit of a variable factor, the return goes negative after a long period of time.
• In the short run when we apply more and more of a variable factor to a fixed amount of fixed factor of production the marginal rate will increase at an increasing rate then increases at a decreasing rate it reaches zero and then becomes negative.
• For example, if we hire more and more laborers but the plant and machinery is constant it the extra labor will not be able to produce any product because there is no machinery to produce the desired product.