📊 MicroEconomics, Theory and Applications 1
Q. The law of diminishing returns states that:
  • (A) as a firm uses more of a variable resource, given the quantity of fixed resources, the average product of the firm will increase
  • (B) as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease
  • (C) in the short run, the average total costs of the firm will eventually diminish
  • (D) in the long run, the average total costs of the firm will eventually diminish
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✅ Correct Answer: (B) as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease

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