If additional unit of a variable factor input causes a fall in the marginal product, this implies that?

A. Total product starts declining
B. Average product has become zero
C. Diminishing returns has set in
D. Increasing returns is operating

Correct Answer:

Option C – Diminishing returns has set in

Explanation

Diminishing returns is the decrease in the marginal output of a production process as the amount of a single factor of production is incrementally increased, while the amounts of all other factors of production stay constant.