Concept:The law of diminishing returns explains what happens when we keep increasing one factor of production while others remain unchanged.
Explanation:This law is also called the law of variable proportions.
It states that if we increase the units of one factor, keeping all other factors fixed, output will first rise but eventually increase at a diminishing rate.
For example, adding more workers to a fixed amount of land will raise output, but after a certain point, each extra worker adds less output than the previous one.
Such constant factors, like land, machinery, and equipment, are the fixed factors in production.
The factor whose quantity can be changed, such as labour or raw materials, is called a variable factor.
Since the law depends on changing the quantity of one input, it directly applies only to the variable factors of production.
It does not apply to fixed inputs, capital equipment, plants, or machinery, because these inputs remain constant in the short run.
Answer:The law of diminishing returns is applicable to the variable factors of production.
Hence, the correct option is B.