Decreasing Marginal Returns Occur in the Short Run as More

question 125

Multiple Choice

Decreasing marginal returns occur in the short run as more labor is hired to work in a fixed sized plant because

• A) less efficient and less productive workers are hired.
• B) adding more workers exhausts the possible gains from specialization.
• C) the entrepreneur does not know how to manage more workers.
• D) each worker will produce more than the worker previously hired.
• E) the plant becomes less specialized.

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Definitions:

Loss-Minimizing

A strategy or approach aimed at reducing losses as much as possible, often used in business and economic contexts.

Marginal Cost

The cost incurred by producing one additional unit of a good or service.

Output

The total amount of goods and services produced by an economic system.

Most Efficiently

Operating in a way that maximizes productivity or benefits while minimizing waste and costs.