The following table shows the total output per hour produced in a factory at various levels of employment of labor. The firm sells each unit of output at $2 and each worker is paid a wage of $12.
Table 5-1
$\begin{array} { | c | c | }
\hline \begin{array} { c }
\text { Nurnber of } \
\text { workers }
\end{array} & \text { Total output } \
\hline 1 & 8 \
\hline 2 & 18 \
\hline 3 & 30 \
\hline 4 & 41 \
\hline 5 & 50 \
\hline 6 & 55 \
\hline 7 & 59 \
\hline 8 & 61 \
\hline 9 & 62 \
\hline
\end{array}$
-Refer to Table 5-1. Diminishing returns occurs beyond:
A) 2 workers.
B) 3 workers.
C) 4 workers.
D) 5 workers.
E) 6 workers.

Question

The following table shows the total output per hour produced in a factory at various levels of employment of labor. The firm sells each unit of output at $2 and each worker is paid a wage of $12.
Table 5-1
 $\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Nurnber of } \
\text { workers }
\end{array} & \text { Total output } \
\hline 1 & 8 \
\hline 2 & 18 \
\hline 3 & 30 \
\hline 4 & 41 \
\hline 5 & 50 \
\hline 6 & 55 \
\hline 7 & 59 \
\hline 8 & 61 \
\hline 9 & 62 \
\hline
\end{array}$
-Refer to Table 5-1. Diminishing returns occurs beyond:
A) 2 workers.
B) 3 workers.
C) 4 workers.
D) 5 workers.
E) 6 workers.

Quizplus · Accepted Answer

Diminishing returns occur when the marginal increase in output starts to decrease as more units of a variable input (labor, in this case) are added to a fixed input. From the table, the total output increases by 10 units when going from 2 to 3 workers, but by only 11 units when going from 3 to 4 workers, indicating diminishing returns start after the addition of the third worker.

The Following Table Shows the Total Output Per Hour Produced