What is described by the law of diminishing marginal returns?

The law of diminishing marginal returns states that as you keep adding more of a variable factor of production, while keeping at least one factor fixed, the additional output generated by each additional unit of the variable factor will eventually begin to decrease. This means that although total output will continue to increase when more units of the variable factor are added, the rate at which it increases will decline after a certain point.

In practical terms, if a farmer uses consistently fixed amounts of land (the fixed factor) and adds more labor (the variable factor), initially, the total production might increase significantly. However, after a point, the benefit of adding more labor decreases because there’s only so much land available for the labor to use efficiently – workers may get in each other's way, or the land may become overworked.

This principle highlights a key aspect of production and resource management in economics. It governs decision-making about resource allocation and is fundamental to understanding production processes.

The other options do not reflect the true nature of the law. The output remains constant or decreases with the increase of fixed factors is not aligned with the essence of diminishing marginal returns. Additionally, the idea that total output increases indefinitely contradicts the very concept that eventually, the increase in output from additional variable factors