Asked by Fatin Izzati on Jun 10, 2024
Verified
Which one of the statements is true?
A) Diminishing returns is a long-run concept while decreasing returns to scale is a short-run concept.
B) Diminishing returns is a short-run concept while decreasing returns to scale is a long-run concept.
C) Diminishing returns is a both short and long-run concept while decreasing returns to scale is a short-run concept.
D) Diminishing returns is a long-run concept while decreasing returns to scale is a short and long-run concept.
Diminishing Returns
An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.
Decreasing Returns
A condition in economics where adding more input (like labor or capital) leads to progressively smaller increases in output.
Long-Run
A term referring to a period of time in economics during which all factors of production and costs are variable.
- Differentiate between diminishing returns to scale and decreasing returns to scale.
Verified Answer
Learning Objectives
- Differentiate between diminishing returns to scale and decreasing returns to scale.
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