Question

True/false. When increasing amounts of a variable factor are added to a fixed factor, the output increases, but at a diminishing rate.

TRUE

Answer 1

this statement is generally true. This is known as the law of diminishing marginal returns. As you add more of a variable factor to a fixed factor, the output will increase up to a certain point, but the amount of increase per unit of input will decrease as you add more of the variable factor.