Diminishing marginal product of labor occurs when adding another unit of labor
A)decreases output.
B)changes output by an amount smaller than the output added by the previous unit of labor.
C)increases output by an amount larger than the output added by the previous unit of labor.
D)decreases output by an amount smaller than the output added by the previous unit of labor.

Question

Quizplus · Accepted Answer

Diminishing marginal product of labor means that the output added by each additional unit of labor decreases as more labor is added. Therefore, option B is correct as it states that the change in output from the addition of another unit of labor is smaller than the output added by the previous unit of labor. Option A is incorrect because it states that adding another unit of labor decreases output, which is not always the case with diminishing marginal product. Option C is incorrect because it states that adding another unit of labor increases output, which is the opposite of the concept of diminishing marginal product. Option D is partially correct in that it acknowledges that output decreases, but it does not specify that the decrease is smaller than the previous unit of labor.

Diminishing Marginal Product of Labor Occurs When Adding Another Unit