When the marginal product of labour is less than the average product of labour,
A)the average product of labour is increasing.
B)the marginal product of labour is increasing.
C)the total product curve is negatively sloped.
D)the firm is experiencing diminishing marginal returns.
E)the average product of labour is at its maximum.

Question

Quizplus · Accepted Answer

When the marginal product of labour is less than the average product of labour, it means that as more labour is added, the increase in output is not sufficient to compensate for the increase in labour input. This is known as diminishing marginal returns and is represented by a decreasing marginal product curve. Therefore, the correct choice is D.

When the Marginal Product of Labour Is Less Than the Average