Final answer:
In the long run, the law of diminishing returns does not apply due to the variablity of inputs and the presence of technological advancements and increased competition.
Step-by-step explanation:
In the long run, all inputs are variable. Since diminishing marginal productivity is caused by fixed capital, there are no diminishing returns in the long run. Firms can choose the optimal capital stock to produce their desired level of output.
Additionally, technological advancements can help to overcome diminishing returns in the long run. Technological improvements have not shown diminishing marginal returns over time. Modern inventions, like the internet or discoveries in genetics or materials science, continue to provide significant gains to output.
Furthermore, increased competition can also contribute to the absence of diminishing returns in the long run. Increased competition forces firms to innovate and find ways to increase productivity. As a result, firms are able to continue to increase output without experiencing diminishing returns.