Mr. Woodard's cabinet shop is experiencing rapid growth in sales. As sales have increased, Mr. Woodard has found it necessary to hire more workers. However, he has observed that doubling the number of workers has less than doubled his output. What is the likely explanation?
A) The law of diminishing marginal utility
B) The law of diminishing marginal productivity
C) The law of supply
D) The law of demand

Question

Quizplus · Accepted Answer

The law of diminishing marginal productivity states that adding more workers leads to a smaller increase in output after a certain point, as other factors of production remain constant.

Mr Woodard's Cabinet Shop Is Experiencing Rapid Growth in Sales