Assume a toy company hires an additional worker to assemble toys,and the size of the factory and amount of equipment remain constant.As a result,the level of output increases but by a smaller amount than when the previous additional worker was hired.This is an example of:

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Quizplus · Accepted Answer

The scenario described is an example of the law of diminishing returns, which states that as additional units of input (in this case, labor) are added while holding other factors constant (such as factory size and equipment), the marginal increase in output (in this case, toy assembly) will eventually decrease. This occurs because at some point, the fixed factors of production (factory size and equipment) become limiting factors to the productivity of additional workers.

Assume a Toy Company Hires an Additional Worker to Assemble