Diminishing Marginal Returns Refers to the Fact That

question 1

Multiple Choice

Diminishing marginal returns refers to the fact that

• A)holding other inputs constant,additional increases in labor lead to smaller changes in output.
• B)holding other inputs constant,additional increases in labor lead to lower output.
• C)additional increases in labor always lead to smaller changes in output
• D)the returns to labor fall as real wages rise.

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Definitions:

Marginal Product

The increase in output that results from a one-unit increase in the input, holding all other inputs constant.

Average Product

The output produced per unit of input, for example, the amount of goods produced per worker or per machine in a given time period.

Formula

A mathematical expression that represents relationships between variables or symbols to calculate a specific value or set of values.

Capital Intensive

Industries or processes that require large amounts of capital investment in heavy machinery or equipment rather than labor.