The principle of diminishing returns does not apply to labor when all inputs are allowed to vary because:
A) a firm can fire inefficient workers.
B) eventually the marginal product of labor will begin to increase again.
C) a firm can build an additional production facility so each worker's share of the facility doesn't necessarily decrease.
D) None of the above, diminishing returns always apply.

Question

Quizplus · Accepted Answer

When all inputs are allowed to vary, a firm can adjust other inputs like capital, such as building additional facilities, which can prevent the marginal product of labor from diminishing.

The Principle of Diminishing Returns Does Not Apply to Labor