Red Stone Creamery currently hires 5 workers.When it added a 6th worker, its output actually fell.Which of the following statements is true?
A)The marginal product of the sixth worker must be negative.
B)The average product of the sixth worker is negative.
C)The sixth worker is not as skilled as the fifth worker.
D)The total product becomes negative.

Question

Quizplus · Accepted Answer

The fact that output fell after hiring the 6th worker suggests that their marginal product is negative. The law of diminishing returns states that as more units of a variable input are added to a fixed input, eventually the marginal product of the variable input will decrease. This appears to be the case with the 6th worker, as adding them actually decreased output.

Red Stone Creamery Currently Hires 5 Workers