Post Utme Nile University 2019 Economics Question 31

Practice objective / multiple choice question 31 from the 2019 Post Utme Nile University Economics examination.

Post Utme Nile University 2019 Economics Objective / Multiple Choice
Question 31 POST_UTME_NILE_UNIVERSITY • 2019 • ECONOMICS • objective

The concept of returns to scale in production theory is closely related to the law of diminishing marginal returns. Explain how the law of diminishing marginal returns leads to the concept of returns to scale.

Answer Options

Correct Answer A. The law of diminishing marginal returns leads to the concept of returns to scale because as the quantity of a variable input increases, the marginal product of that input decreases.
B. The law of diminishing marginal returns leads to the concept of returns to scale because as the quantity of a variable input increases, the marginal product of that input increases.
C. The law of diminishing marginal returns is unrelated to the concept of returns to scale.
D. The law of diminishing marginal returns leads to the concept of returns to scale because as the quantity of a variable input increases, the marginal product of that input remains cons\tant.
Correct Answer
A
Correct Option:
The law of diminishing marginal returns leads to the concept of returns to scale because as the quantity of a variable input increases, the marginal product of that input decreases.

About This Question

This is Post Utme Nile University 2019 Economics Question 31. It is one of the objective questions from the 2019 Post Utme Nile University Economics examination.

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