The Principle of Diminishing Returns Does NOT Apply to Labor

question 167

Multiple Choice

The principle of diminishing returns does NOT apply to labor when all inputs are allowed to vary because:

• A)a firm can build an additional production facility so each worker's share of the facility doesn't necessarily decrease.
• B)eventually the marginal product of labor will begin to increase again.
• C)a firm can fire inefficient workers.
• D)None of the above,diminishing returns always apply.

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Definitions:

Vendor-Managed Inventory

A supply chain initiative where the supplier assumes the responsibility of managing inventory levels for the customer.

Inventory Control

The regulation of inventory levels within a business to manage supply, minimize costs, and prevent shortages or surpluses.

Just-In-Time (JIT) System

A supply chain management strategy that reduces inventory costs by delivering raw materials and components just as they are needed in the production process.