Figure 7.3 Fancy Footwear manufactures shoes.Figure 7.3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run.
-Refer to Figure 7.3.For what quantity of labour does production display diminishing returns?

Question

Figure 7.3  Fancy Footwear manufactures shoes.Figure 7.3 shows Fancy Footwear's marginal product of labour and average product of labour curves in the short run.
-Refer to Figure 7.3.For what quantity of labour does production display diminishing returns?

Quizplus · Accepted Answer

Diminishing returns occur when adding an additional factor of production results in a smaller increase in output. Without seeing Figure 7.3, the correct answer is typically determined by identifying the point at which each additional unit of labor adds less to production than the previous unit. Given the options, if diminishing returns are said to occur for more than 4 units of labor, it implies that starting with the 5th unit of labor, the increase in output per additional unit of labor begins to decrease.

Figure 73 Fancy Footwear Manufactures Shoes