Final answer:
Diminishing returns begin to occur when the marginal product curve intersects the average product curve, marking the point where each additional unit of input contributes less to the total output.
Step-by-step explanation:
The concept of diminishing returns is crucial in understanding the production process and efficiency in economics. It occurs when additional units of input lead to a smaller increase in output, an indication that the efficiency of production is decreasing. To recognize when diminishing returns begin to occur, we should look at the behavior of the marginal product curve and the average product curve.
Diminishing returns start when the marginal product of an additional unit of input starts to decline. This happens after a certain point of adding more inputs where each additional unit of input contributes less to the total output than the previous unit. In terms of the answer choices provided, this phenomenon corresponds when the marginal product curve intersects the average product curve (B). Initially, the marginal product may rise, and the curve slopes upward. As diminishing returns set in, the marginal product curve will eventually slope downward and cross the average product curve. It is at this intersection where the marginal product equals the average product, marking the onset of diminishing returns.