📚 Learning Guide
Diminishing Marginal Returns
hard

What phenomenon describes the decrease in the additional output generated by adding one more unit of a variable input while keeping other inputs constant in the short run?

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Choose the Best Answer

A

Total product

B

Diminishing marginal returns

C

Long-run production

D

Short-run production

Understanding the Answer

Let's break down why this is correct

Answer

The phenomenon you are asking about is called diminishing marginal returns. This occurs when you add more of one input, like workers, while keeping other inputs, such as machinery, the same. At first, adding more workers can lead to a significant increase in output because they can help each other and work more efficiently. However, after a certain point, each new worker contributes less and less to the total output because they have limited machinery to use, and they may get in each other's way. For example, if a factory has one machine and you keep adding workers, eventually, those extra workers will not be able to work effectively together, and the increase in production will slow down.

Detailed Explanation

This concept means that if you keep adding more of one thing, like workers, the extra output you get from each new worker will start to get smaller. Other options are incorrect because Total product refers to the overall amount produced, not how the extra output changes; Long-run production looks at all inputs changing, not just one.

Key Concepts

total product
short-run production
long-run production
Topic

Diminishing Marginal Returns

Difficulty

hard level question

Cognitive Level

understand

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