The diagram represents a production function. At which of the points does diminishing returns set in
- I
- J
-
K
- L
The correct answer is: C
Explanation
In a typical production function diagram, diminishing returns set in at the point where the output begins to increase at a decreasing rate. This is usually observed when the slope of the production function starts to decline.
Diminishing returns set in at Point K, where the increase in output begins to slow down.