When too much of an input is used, and output decreases, the production process results in:

Correct option is C

The correct answer is (C) Decreasing returns

Explanation:
• This phenomenon is part of the Law of Variable Proportions (also known as the Law of Diminishing Returns).
• In Phase III of this law, as more units of a variable input (like labor) are added to fixed inputs (like land), the Total Physical Product (TPP) actually begins to decline.
• This means the Marginal Product (MP) becomes negative.
• It happens because the fixed factor becomes over-crowded, leading to management difficulties and inefficiency in the production process.
• Although the question specifically describes the outcome of "Negative Returns" (where total output decreases), in many exam contexts, this is broadly categorized under the trend of "decreasing returns" to describe the downward trend of productivity.

Information Booster:
• Phase I: Increasing Returns (MP rises, TPP increases at increasing rate).
• Phase II: Diminishing Returns (MP falls but is positive, TPP increases at decreasing rate).
• Phase III: Negative Returns (MP is negative, TPP decreases).

Additional Knowledge:
• Constant returns (Option A): Output increases exactly in proportion to the increase in inputs.
• Increasing returns (Option B): Output increases more than proportionately to the increase in inputs.
• Economic Stage: A rational producer always operates in Stage II where MP and AP are decreasing but positive.