If a Firm Is Experiencing Diminishing Marginal Returns to Labor

question 15

Multiple Choice

If a firm is experiencing diminishing marginal returns to labor, which of the following must be true?

• A)The first workers the firm hired were better than the workers hired later on.
• B)The firm is experiencing decreasing returns to scale.
• C)The positive effect of specialization in production is being offset by the negative effect of crowding of inputs.
• D)Output is decreasing.
• E)The firm should buy more nonlabor inputs.

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