Diminishing returns to labor means:
A) that the marginal product of labor declines as the amount of labor used in a sector increases.
B) that the marginal product of labor declines as the amount of capital combined with labor in a sector increases.
C) that the marginal product of labor declines as the amount of land combined with labor in a sector increases.
D) that the marginal product of capital declines as the amount of labor used in a sector increases.

Question

Quizplus · Accepted Answer

Diminishing returns to labor means that as more labor is added to a fixed amount of capital and land, the marginal product of labor will eventually begin to decrease. This is because there are only so many resources and inputs available, and adding more labor beyond a certain point will result in less additional output per additional unit of labor.

Diminishing Returns to Labor Means