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WAEC Economics 1996 Question 17

Question 17

Theory of Production

Diminishing returns occur in the short run when there is a reduction in the

  1. A.average product of the fixed factor
  2. B.total product of the variable factor
  3. C.total product of the fixed factor
  4. D.marginal product of the variable factor
  5. E.marginal product of the fixed factor
Show the answer and explanation

Answer: D (marginal product of the variable factor)

Explanation

Diminishing returns set in when each extra unit of the variable factor adds less output, i.e. its marginal product falls.