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AP® Microeconomics

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Law of Diminishing Returns

APMICR-6VSDX3

Which of the following explains why the law of diminishing marginal returns occurs?

A

Per-units costs for a firm increase as the firm builds successively larger plant sizes.

B

Successive units of a good yield lesser amounts of satisfaction to consumers.

C

Additional variable resources crowd fixed resources.

D

When a firm reduces price to increase sales, additional revenue to the firm is less than the price.

E

When the price of a product is reduced, total revenue falls.