The law of diminishing marginal returns holds even when there are no fixed factors. sets in because not all workers are equally productive. applies only in the short run. ultimately explains why production displays diseconomies of scale.

The correct answer is: applies only in the short run.

Explanation:

The law of diminishing marginal returns states that keeping other things constant, as a producer goes on increasing the quantity employed of input, the marginal returns from each additional unit of input goes on declining.

In other words, as we increase an input the output first increases at an increasing rate then starts increasing at a decreasing rate.

As more and more unit of a variable input is combined with fixed inputs, the marginal returns from variable input go on declining. This applies only in the short run. In the long run, all factors are variable.