At which point on the total product curve do negative marginal returns occur?

• A. When each additional unit of input increases total output at a decreasing rate
• B. When each additional unit of input decreases total output
• C. When total output remains constant as more input is added
• D. When each additional unit of input increases total output at an increasing rate

Answer: (B)

Verified step by step guidance

1. Understand the concept of the total product (TP) curve, which shows the relationship between the quantity of input used and the total output produced.
2. Recall that marginal product (MP) is the additional output produced by adding one more unit of input, mathematically expressed as \(MP = \frac{\Delta TP}{\Delta input}\).
3. Identify that negative marginal returns occur when the marginal product becomes negative, meaning each additional unit of input actually reduces total output.
4. On the total product curve, this corresponds to the point where the curve starts to slope downward, indicating that total output decreases as more input is added.
5. Therefore, negative marginal returns occur at the point on the total product curve where adding more input causes total output to decline.