The diagram below represents a production function. At which of the points does diminishing returns set in ________?

A. R
B. S
C. T
D. V

Correct Answer:

Option D = V

Explanation

Law of diminishing returns states that as more units of a variable input are added to fixed amounts of land and capital, the change in total output will first rise and then fall. From the above diagram, diminishing returns set in at point V