Post Utme Elizade University 2023 Commerce Question 16

Practice objective / multiple choice question 16 from the 2023 Post Utme Elizade University Commerce examination.

Post Utme Elizade University 2023 Commerce Objective / Multiple Choice
Question 16 POST_UTME_ELIZADE_UNIVERSITY • 2023 • COMMERCE • objective

In a perfectly competitive market, the supply curve is upward-sloping because of the law of increasing marginal opportunity costs. However, this is not the case in a perfectly competitive market with a fixed supply of resources. Instead, the supply curve is horizontal because of the law of diminishing marginal returns. Which of the following is a correct statement about the law of diminishing marginal returns?

Answer Options

Correct Answer A. The law of diminishing marginal returns states that as the quantity of a variable input increases, the marginal product of that input decreases.
B. The law of diminishing marginal returns states that as the quantity of a variable input increases, the marginal product of that input increases.
C. The law of diminishing marginal returns states that as the quantity of a variable input increases, the marginal product of that input remains constant.
D. The law of diminishing marginal returns states that as the quantity of a variable input increases, the marginal product of that input decreases and then increases.
Correct Answer
A
Correct Option:
The law of diminishing marginal returns states that as the quantity of a variable input increases, the marginal product of that input decreases.

About This Question

This is Post Utme Elizade University 2023 Commerce Question 16. It is one of the objective questions from the 2023 Post Utme Elizade University Commerce examination.

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