The law of diminishing returns refers to a point at which profits or benefits gained are less than the amount invested.

• A. A point where profits exceed costs
• B. A point where profits or benefits gained are less than the amount invested
• C. A point of maximum production
• D. A point where costs equal revenue

Answer: (B)

The idea being tested is diminishing returns: as you add more of one input while keeping others fixed, each additional unit of input contributes less to output than the previous one. In practice, initial increases in input—like more fertilizer or workers—can raise yield a lot, but after a point the extra input adds only small gains. If you keep increasing input, those small gains may not cover the extra cost, so the net benefit becomes smaller.

That’s why the statement describing profits or benefits gained as being less than the amount invested fits best. It captures the notion that the incremental benefits fall short of the added cost, signaling diminishing marginal returns.

The other ideas describe profitability (profits exceeding costs), a production maximum, or break-even (costs equal revenue), none of which pinpoint the diminishing-increment concept.