Diminishing marginal returns implies that firms
A) require fewer and fewer workers to produce each additional unit of output.
B) require more and more workers to produce each additional unit of output.
C) get decreasing amounts of revenue for each unit of output they produce.
D) get increasing amounts of revenue for each unit of output they produce.

Question

Quizplus · Accepted Answer

Diminishing marginal returns occur when the marginal or additional output produced by each additional unit of input (such as labor or capital) starts to decline. This means that, at some point, adding more inputs will result in smaller increases in output. Therefore, firms require more and more workers to produce each additional unit of output.

Diminishing Marginal Returns Implies That Firms