Asked by Jonnel Young on Jun 27, 2024
Verified
If the law of diminishing returns applies to labor then:
A) the marginal product of labor must eventually become negative.
B) the average product of labor must eventually become negative.
C) the marginal product of labor must rise and then fall as employment rises.
D) the average product of labor must rise and then fall as employment increases.
E) after some level of employment, the marginal product of labor must fall.
Marginal Product
The additional output produced by using one more unit of a production input, holding all other inputs constant.
Employment
The condition of having a paid job or occupation, involving a contract between an employer and an employee that provides compensation for work performed.
- Gain insight into the theory of diminishing returns and how it is applied in everyday contexts.
- Elucidate on production functions and undertake the calculation of marginal and average product of labor.
Verified Answer
JJ
Jaeda JenningsJul 02, 2024
Final Answer :
E
Explanation :
The law of diminishing returns states that as additional units of a variable input (such as labor) are added to a fixed input (such as capital), the marginal product of the variable input will eventually decrease. This means that after some level of employment, the additional output produced by each additional unit of labor will begin to decrease, leading to a fall in the marginal product of labor. Therefore, option E is the correct answer.
Learning Objectives
- Gain insight into the theory of diminishing returns and how it is applied in everyday contexts.
- Elucidate on production functions and undertake the calculation of marginal and average product of labor.