Question on: JAMB Economics - 1994

Diminishing returns set in when the marginal product of the variable input begins to decline. In the context of a production function, this corresponds to the point where the slope of the curve starts to flatten.

• Point I: This is at the beginning of production, where output is increasing at an increasing rate.
• Point J: Output is increasing at a decreasing rate.
• Point K: This is the inflection point, where the rate of increase begins to slow down (diminishing returns begin).
• Point L: This is beyond the point of diminishing returns.