Once production has reached the maximum average product of labor,if production increases then
A) average fixed cost rises.
B) total costs decrease.
C) total product decreases.
D) decreasing marginal returns occur.
E) the plant size must be increased.

Question

Quizplus · Accepted Answer

Once production has reached the maximum average product of labor, any increase in production will result in decreasing marginal returns (where additional inputs no longer result in proportional output increases). This is due to the law of diminishing marginal returns, which states that adding more of a variable input (such as labor) to a fixed input (such as capital or land) will eventually result in decreasing marginal output. The other options in the question do not accurately reflect what would happen in this scenario.

Once Production Has Reached the Maximum Average Product of Labor,if