If a firm is experiencing diminishing marginal returns to labor,then
A)total output must be decreasing
B)total output rises more slowly as additional workers are added
C)the firm must decrease the amount of labor it hires
D)total output per worker must be rising
E)the firm must be operating in the long run

Question

Quizplus · Accepted Answer

Diminishing marginal returns to labor means that as more workers are added, the increase in total output becomes smaller and smaller. This does not necessarily mean that total output is decreasing, but rather that each additional worker contributes less to the total output than the worker before them. Therefore, option B is the correct choice. The other options do not necessarily follow from the premise of diminishing marginal returns to labor.

If a Firm Is Experiencing Diminishing Marginal Returns to Labor,then