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JAMB Economics 1988 Question 10

Question 10

Theory of Production

The Law of Diminishing Returns begins to operate when

  1. A.total product begins to rise
  2. B.total product begins to fall
  3. C.marginal product begins to fall
  4. D.marginal product begins to rise.
Show the answer and explanation

Answer: C (marginal product begins to fall)

Explanation

Diminishing returns set in once each extra worker adds less output than the one before, i.e. when marginal product starts to fall.