If a Firm Is Experiencing Diminishing Marginal Returns to Labor,then

question 153

Multiple Choice

If a firm is experiencing diminishing marginal returns to labor,then which of the following statements is 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 with decreasing inputs.
• E)The firm should buy more non-labor inputs.

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Definitions:

Corporate Groups

A collection of parent and subsidiary companies that function as a single economic entity through a common source of control.

Indirect Ownership Interests

Ownership in a company that is not held directly by the owner but through a chain of intermediary entities.

Sequential Consolidation Method

A process in accounting where the financial results of subsidiary companies are consolidated with the parent company's financial statements one after another, usually in the order of acquisition.