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Q:

If marginal returns increase at a decreasing rate, then total returns:

  • 1
    Increases
  • 2
    Decreases
  • 3
    Remains Constant
  • 4
    Income becomes
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Answer : 2. "Decreases"
Explanation :

This question talks about increasing marginal returns at a decreasing rate, which is actually a diminishing marginal return. In economics, the law of diminishing returns states: "If increasing amounts of a variable factor are applied to a fixed amount of other factors per unit of time, the increase in total output will increase at first but beyond a point it will According to Richard A. Bilas's law of diminishing returns, if investment of one resource is kept constant, the resulting increase in output will become smaller and smaller beyond a point. “So as marginal returns increase at a decreasing rate, total returns will eventually decrease.

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