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

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

Answer Details

Diminishing returns set in at point J. A production function shows the maximum amount of output that can be produced from a given amount of inputs. As more and more inputs are added, output initially increases at an increasing rate, but at some point, adding additional inputs will result in smaller increases in output. This is known as diminishing returns. In the diagram, point J is where the slope of the production function starts to decrease. This indicates that additional inputs are resulting in smaller increases in output. At point J, adding more inputs is still increasing output, but at a decreasing rate. Beyond point J, adding more inputs would result in decreasing output, which is known as negative returns. Therefore, point J is the point at which diminishing returns set in.