If the marginal returns increases at a diminishing rate, the total return

(A) increases
(B) decreases
(C) remains constant
(D) becomes income

Correct Answer : decreases
Question Asked : SSC CGL Tier-I Exam 2014
Explanation : The question talks about marginal return increasing at diminishing rate which, in reality, is diminishing marginal return. In economics, the law of diminishing returns states: "If increasing amounts of a variable factor are applied to a fixed quantity of other factors per unit of time, the increments in total output will first increase but beyond some point, it begins to decline".
Richard A. Bilas describes the law of diminishing returns as: "If the input of one resource to other re-sources is held constant, total output will increase but beyond some point, the resulting output increases will become smaller and smaller." So as the marginal return increases at diminishing rate, the total return will eventually decrease.
Useful Quotations for : UPSC, State PSC, IBPS, SSC, Railway, NDA, Police Exams
Like The Facebook Page CurrentGK for Current Affairs, Latest GK & Employment News
Tags : Microeconomics
Always Ask Questions