In hog production, which item is most likely a variable expense contributing to diminishing returns within a year?

• A. Protein Supplement In The Feed Ration
• B. Soybeans Purchased
• C. Concrete Floor
• D. Insurance Premium

Answer: (A)

When you look at costs in the short run, some expenses vary with how much you produce, and others stay fixed. Diminishing returns show up when adding more of a variable input increases output by smaller and smaller amounts. In hog production, a protein supplement added to the feed is a high-cost, variable input that directly tracks how many hogs you’re feeding and how much feed you’re pushing through. Up to a point, extra protein helps gains, but beyond the animals’ needs, more protein doesn’t produce proportionate weight gain and just raises costs. That combination—rising cost with decreasing additional output within a year—makes the protein supplement a classic example of a variable expense contributing to diminishing returns. The other options are either fixed or less directly tied to short-run diminishing returns: a concrete floor is a fixed asset, the insurance premium is typically fixed for the year, and soybeans purchased are a feed ingredient but don’t illustrate the diminishing-return effect as clearly as the high-cost protein supplement.