Question

In the classical agricultural production function, as increasing units of a variable input (e.g., fertilizer) are applied to a fixed input (e.g., land), total output initially rises at an increasing rate, then at a decreasing rate, and may eventually decline. This decelerating-but-still-positive phase of output response is best explained by which law, and corresponds to which stage of production?

A Law of comparative advantage — Stage I
B Law of diminishing marginal returns — Stage II
C Law of increasing returns — Stage III
D Cobb-Douglas constant returns — Stage III
E Law of supply — Stage I
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