Ricardo assumes the law of diminishing ________.
Last updated Sep 22, 2026
Correct Answer:
Option B —
marginal returns
Understanding Ricardo’s LawDavid Ricardo, a classical economist, applied the Law of Diminishing Marginal Returns primarily to agriculture.
The Principle: As more units of a variable factor (like labor or capital) are added to a fixed factor (like a specific plot of land), the additional output generated by each new unit will eventually decrease.
Why it Happens: Ricardo argued that since the supply of fertile land is fixed, as a population grows, farmers are forced to either:
Cultivate the same land more intensely (Intensive Margin).
Move to less fertile "marginal" land (Extensive Margin).
The Result: In both cases, the cost of producing an extra unit of grain increases because the marginal productivity of the inputs decreases.
Answer verified by Quintessence Classes faculty — Karan Nagar, Srinagar.
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