honeycfa

The law of diminishing returns states that at some point:

A) as more of a resource is devoted to production, holding the quantity of other inputs constant, the output will increase, but at a decreasing rate.

B) as less of a resource are devoted to production, holding the quantity of other inputs constant, the output will decrease, but at an increasing rate.

C) as more of a resource is devoted to production, holding the quantity of other inputs constant, at some point output will begin to decrease.

---

At low levels of output, increasing marginal returns will exist corresponding to the downward sloping portion of the marginal cost curve. As marginal costs begin to increase diminishing marginal returns will occur.

honeycfa

Which of the following is least accurate with regard to the long-run and the short-run?

A) Long-run cost curves pertain to plants of different sizes.

B) In the short run, only plant size is fixed.

C) In the long-run, all costs are variable.

---

In the short-run, labor is major variable cost. Plant size, in addition to technology and equipment, are fixed.