If there are diminishing marginal returns to labor,
A)output diminishes as additional workers are added
B)the management team grows as more workers are hired
C)the rise in output becomes smaller and smaller with each successive worker hired
D)the management team shrinks as successive workers are added
E)macroeconomic business cycles are generated by microeconomic production functions

Question

Quizplus · Accepted Answer

Diminishing marginal returns to labor means that the additional output produced by each additional worker hired becomes smaller and smaller. Therefore, the rise in output becomes smaller and smaller with each successive worker hired, making C the correct choice. Options A, B, D, and E are incorrect as they do not accurately describe the concept of diminishing marginal returns to labor.

If There Are Diminishing Marginal Returns to Labor