Exhibit 22-8

-Exhibit 22-8 shows how output varies with the only variable input used in its production.The table indicates that diminishing marginal returns set in with the hiring of which unit of labor?

Question

Exhibit 22-8
 
-Exhibit 22-8 shows how output varies with the only variable input used in its production.The table indicates that diminishing marginal returns set in with the hiring of which unit of labor?

Quizplus · Accepted Answer

Diminishing marginal returns occur when adding additional units of a variable input decreases the marginal product of that input, while holding all other inputs constant. In this case, the marginal product of labor decreases from 16 to 12 when the third worker is hired, which indicates that diminishing marginal returns have set in. Therefore, the correct answer is choice C) third.

Exhibit 22-8 -Exhibit 22-8 Shows How Output Varies with the Only Variable