Diminishing marginal returns refers to the fact that
A)holding other inputs constant,additional increases in labor lead to smaller changes in output.
B)holding other inputs constant,additional increases in labor lead to lower output.
C)additional increases in labor always lead to smaller changes in output
D)the returns to labor fall as real wages rise.

Question

Quizplus · Accepted Answer

Diminishing marginal returns means that as we add more units of one input (in this case, labor), while holding all other inputs constant, the additional output we get from each additional unit of that input will eventually decrease. In other words, the first unit of labor we add might increase output by a lot, but eventually, as we add more units of labor, the amount by which output increases with each additional unit will get smaller and smaller.

Diminishing Marginal Returns Refers to the Fact That