Which factor is likely to lead to diminishing returns?

Diminishing returns occur when an increase in one factor of production, while holding others constant, leads to a smaller increase in output. In this scenario, adding more capital without increasing land or labor exemplifies this principle. When additional machines or equipment are introduced to a fixed amount of labor and land, those resources may become less efficient. For instance, if there are too many machines for the available workers to operate effectively, the benefits of the new capital begin to decline, leading to a situation where each additional unit of capital contributes less to overall production.

On the other hand, increasing technology in production, improving workforce training programs, and utilizing natural resources effectively often enhance productivity and efficiency. These factors can help optimize the use of existing resources rather than lead to diminishing returns, as they do not solely rely on increasing one factor while keeping others unchanged. Such improvements can lead to greater output per unit of input, countering the potential for diminishing returns.