In the Short Run, Why Does a Production Function Eventually

question 234

Multiple Choice

In the short run, why does a production function eventually display diminishing returns to labour?

• A)As the number of workers increases, it becomes difficult to monitor them.
• B)As a firm hires more workers, the skills and the work ethic of the additional workers will eventually decline.
• C)As the number of workers increases, eventually the gains from the division of labour and specialisation are used up.
• D)The opportunity cost of hiring additional workers must eventually rise.

---

Definitions:

Financial Liability

An obligation that requires the entity to transfer economic benefits including money, goods, or services to another entity as a result of past transactions or events.

Convertible Debt

A type of bond or other form of debt that can be converted into a specified number of shares of the issuing company's stock at certain times during its life.

GAAP

Generally Accepted Accounting Principles, a set of accounting standards, principles, and procedures that companies must follow when compiling their financial statements.

APB

The Accounting Principles Board, which was an organization that set standards for financial reporting and accounting in the past, succeeded by the FASB.