Question

Once we enter the region of diminishing returns,

A. Variable cost increases at an increasing rate.
B. Variable cost decreases at a decreasing rate.
C. Variable cost decreases at an increasing rate.
D. Variable cost increases at a decreasing rate.

Answer 1

A is the correct answer.

Step-by-step explanation:

The law of diminishing returns assumes that there won't be any change in the technique of production and if the production technique changes then the efficiency of the production would increase. This law is applicable only when the method of technology remains unchanged. The law is applicable only in the short run because the supply of many factors can't be increased in a short period. The units of variable factors are also considered to be homogeneous.