Question

Why does production eventually experience diminishing marginal returns to labor in the short​ run?

A. Since all factors of production are fixed in the short​ run, as more and more workers must share these fixed​ factors, the marginal product of each additional worker will eventually decrease.
B. Since all factors of production are fixed in the short​ run, as more and more workers must share these fixed​ factors, the marginal product of each additional worker will immediately decrease.
C. Since the skill level of labor​ (the amount of human​ capital) is fixed in the short​ run, as more and more physical capital is​ added, the marginal product of each additional worker will decrease.
D. Since at least one factor of production is fixed in the short​ run, as more and more workers must share the fixed​ factors, the marginal product of each additional worker will immediately decrease.
E. Since at least one factor of production is fixed in the short​ run, as more and more workers must share the fixed​ factors, the marginal product of each additional worker will eventually decrease.

Answer 1

Answer: Option A

Explanation: In simple words, diminishing marginal returns refers to the situation when the marginal output from production starts decreasing with every additional increase in the factor of production.

This situation occurs due to the fact that the factor of production cannot be increased in short run and if one keeps adding the workers the efficiency of each worker will starts decreasing due to congested work operations.

Hence from the above we can conclude that the correct option is A.