What is the effect of diminishing returns to labor on the slope of the aggregate production function (where output is measured on the vertical axis and employment is measured on the horizontal axis)?
A) It implies that the slope of the curve increases as the number of workers employed increases.
B) It implies that the slope of the curve becomes negative as the number of workers employed increases.
C) It implies that the slope of the curve decreases (or becomes flatter)as the number of workers employed increases.
D) It keeps the slope the same throughout.
E) It has nothing to do with the slope of the aggregate production function.

Question

Quizplus · Accepted Answer

Diminishing returns to labor imply that adding an additional unit of labor to the production process results in smaller and smaller increases in output. This means that the slope of the aggregate production function (which represents the relationship between output and employment) becomes less steep or flatter as the number of workers employed increases. Therefore, the correct answer is (C) - it implies that the slope of the curve decreases (or becomes flatter) as the number of workers employed increases.

What Is the Effect of Diminishing Returns to Labor on the Slope