Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increasing labor always leads to higher productivity without limits.
B
Hiring more workers initially increases output, but additional workers yield less output.
C
Diminishing returns only occur when all inputs are variable.
D
Businesses should hire as many workers as possible to maximize efficiency.
Understanding the Answer
Let's break down why this is correct
Answer
The concept of diminishing marginal returns means that as a business hires more workers, each additional worker adds less and less to the overall output. For example, if a factory has one worker, they might produce 10 toys per hour. If a second worker is added, the total output might increase to 18 toys, but if a third worker is added, the output might only rise to 24 toys. This shows that while more workers can help produce more, the benefit of each new worker decreases after a certain point. Therefore, businesses must carefully consider how many workers to hire, as hiring too many can lead to less efficient production and higher costs.
Detailed Explanation
When a business hires more workers, the first few usually help a lot. Other options are incorrect because Some people think that more workers always mean more output; This option suggests diminishing returns only happen when all inputs change.
Key Concepts
Diminishing Marginal Returns
Labor Supply Decisions
Productivity Management
Topic
Marginal Returns and Labor Supply
Difficulty
easy level question
Cognitive Level
understand
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