Question

Americans spend more money on strawberries than any other fresh fruit except apples and most of these strawberries are produced in California. Suppose the Sumner Strawberry Farm is a typical California strawberry farm. The Sumner farm leases 50 acres of strawberry fields and waters the fields using an elaborate drip irrigation system. The cost of leasing the farm and its equipment is $350 thousand a year. Mr. Sumner also has to hire farm workers to harvest the fields and package the strawberries for market. Strawberry pickers in California are hired at will, meaning that Mr. Sumner can fire strawberry pickers at any time without explanation.

As more and more strawberry pickers are hired by Charles Sumner to pick strawberries, _______.

A. the marginal product of strawberry pickers must eventually fall
B. the marginal cost of boxes of strawberries must eventually rise
C. the average cost of boxes of strawberries must eventually rise
D. all of the other choices

Answer 1

When more strawberry pickers are hired on a California strawberry farm, the marginal product of each additional pickers will eventually fall due to the Law of Diminishing Marginal Returns.

Step-by-step explanation:

As more and more strawberry pickers are hired by Charles Sumner to pick strawberries, the marginal product of strawberry pickers must eventually fall.

This is representative of the Law of Diminishing Marginal Returns, which suggests that as additional units of a variable factor of production, like labor, are added to a fixed factor, such as land, the additional output created by each additional unit of labor will at some point decrease. This happens because as the number of workers increases, each additional worker has less land to work on and less equipment to use, so their productivity adds less to the total output.