Question

The law of diminishing returns

a. applies to a capitalist economy but would be irrelevant if the means of production were owned by the state.

b. explains why marginal cost eventually increases as output expands.

c. implies that average fixed cost will remain unchanged as output expands.

d. is true for physical production activities but not for activities such as studying.

Answer 1

b. explains why marginal cost eventually increases as output expands.