Diminishing marginal returns occur because
A) hiring more employees means that each has less capital with which to work.
B) it is more difficult to manage a firm as the size of the workforce and capital stock both grow.
C) the best employees will always be hired first.
D) hiring more employees means that they will subdivide tasks and therefore become more efficient.

Question

Quizplus · Accepted Answer

Diminishing marginal returns occur because as more employees are hired, the capital (machinery, equipment, technology) available for each employee to work with is reduced, causing a decrease in productivity and efficiency. This is due to the fact that there are only a certain number of resources available, and as they are divided among more workers, each worker has less to work with.

Diminishing Marginal Returns Occur Because