Question

Marginal returns start to decrease when more and more workers _______.

A. have to share the same equipment and workspace
B. produce less and less output
C. require jobs to be too specialized
D. produce less and less average product

Answer 1

Marginal returns decrease when more workers have to share fixed equipment and workspace, following the diminishing marginal productivity principle. The answer to the question is D. produce less and less average product.

Step-by-step explanation:

Marginal returns start to decrease when more and more workers have to share the same equipment and workspace. This phenomenon is known as diminishing marginal productivity, which is a general rule that as a firm employs more labor, the amount of additional output produced declines.

This occurs because, in the short run, the amount of capital (such as equipment and workspace) is fixed. For example, in a typing process, if you add more typists beyond the optimal number of computers available, the marginal productivity of each additional worker will decrease significantly.

Similarly, at Stage 3 of production, hiring too many workers leads to negative returns, where additional workers not only add less to output but can decrease the total output due to overcrowding and inefficiencies.

The answer to the question is D. produce less and less average product.