Question on: JAMB Economics - 2018

The diagram represents a production function, which illustrates the relationship between inputs (e.g., labor, capital) and output. Diminishing returns set in at the point where adding more of a variable input (while holding other inputs constant) leads to a decrease in the marginal product of that input. This means that the increase in output for each additional unit of input starts to decline.

• Point S: This is the point where the slope of the production function begins to decrease. This signifies that as more input is added, the increase in output becomes smaller. Therefore, diminishing returns set in at point S.