Diminishing marginal returns to labour occur because
A) workers become more efficient over time.
B) after a while it is hard to find a good worker.
C) larger companies are less efficient.
D) the capital resources used by the firm are fixed in the short run.

Question

Quizplus · Accepted Answer

Diminishing marginal returns to labor occur when additional workers are added to a fixed amount of capital, leading to a point where each new worker contributes less to output than the previous one. This is because the capital (tools, equipment, space) available to each worker is reduced as more workers are added, assuming the capital is fixed in the short run.

Diminishing Marginal Returns to Labour Occur Because