Law of diminishing returns" refers to an eventual fall in the average product of the variable factor. True or False ?
The law of diminishing returns states that in all productive processes,adding more of one factor of production, while holding all others constant, will at some point yield lower per-unit returns. The law of diminishing returns does not imply that adding more of a factor will decrease the total production, a condition known as negative returns, though in fact this is common. So, the statement is true, as this law refers to an eventual fall in the average product of the variable factor.