Law of diminishing returns means that marginal product eventually falls when more inputs are added into the production.

Question

BlackTom AI · Accepted Answer

The statement under examination is about the law of diminishing returns. 
Option 1: True. This aligns with the core idea of the law, which holds that when one input is varied while other inputs are held constant, the marginal product of that input eventually declines as more units are added. In other words, after some point, each additional unit of the input contributes less to output than the previous one because fixed inputs constrain efficiency or resource utilization. 
Option 2: False. If this were true, it would imply that marginal product never declines with extra input, which contradicts the standard economic concept that, with a fixed scale of other inputs, additional units of one input typically yield diminishing additional output due to factors like overcrowding, limited technology, or capacity constraints. However, early stages can show increasing marginal returns before diminishing returns set in, meaning the blanket statement that marginal product ever falls is not guaranteed at every level of input unless the law is properly framed as a general tendency over a range of input levels. 
In summary, the truth of the statement depends on understanding the law as describing a typical pattern under ceteris paribus conditions (other inputs fixed) where marginal product eventually declines as more of one input is added, though there can be an initial phase of increasing marginal returns before that decline begins. Given these nuances, the two options contrast the general characterization with an absolute negation, inviting attention to the conditions under which the law applies.

Law of diminishing returns means that marginal product eventually falls when more inputs are added into the production.

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