If a firm adds more number of workers but total output starts to increase at a decreasing rate, the firm is experiencing:

CA Foundation · Business Economics · PYQS · September 2025
If a firm adds more number of workers but total output starts to increase at a decreasing rate, the firm is experiencing:
(A) A. Increasing Returns to Scale
(B) B. Diminishing Marginal Returns
(C) C. Constant Returns to Scale
(D) D. Negative Marginal Returns

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Diminishing Marginal Returns

Topics: Theory of Production and Cost

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic