The "law of diminishing returns" states that
A. the demand for any product will tend to decline over time
B. the more of a product a person buys, the less utility that particular product offers him
C. if the price of a product is lowered, a smaller quantity will be demanded
D. if the price of a product is lowered, quantity demanded stays the same
E. if the price of a product is raised, a smaller quantity will be demanded
Answer: (E) The law of diminishing returns states that as the price of a product increases, the quantity demanded of the same product declines (E). As such, the graph of demand versus price is a downward-sloping straight line. None of the other choices correctly depicts the law of diminishing returns.