The term diminishing returns to labor means that
A)the wage rate falls as a person takes on more jobs.
B)total output decreases as one more unit of labor is applied to production.
C)the market value of labor decreases as more labor is supplied.
D)increases in output decline as additional units of labor are used in production.
E)the production of labor is becoming less profitable with decreasing real wages.

Question

Quizplus · Accepted Answer

Diminishing returns to labor refers to the situation where increases in output decrease as additional units of labor are used in production. In other words, at some point, adding more workers to a production process will lead to smaller increases in output, due to factors such as limited space, equipment, and other resources. This phenomenon is a key concept in understanding production and labor economics.

The Term Diminishing Returns to Labor Means That