As more output is produced, the marginal product of labor declines because the firm's marginal revenue declines: a) if the firm's output supply curve is inelastic. b) if firms reduce the wage paid to labor. c) because of the law of diminishing returns.

Question

Business

Dalia Avery

18 February, 15:07

As more output is produced, the marginal product of labor declines because the firm's marginal revenue declines: a) if the firm's output supply curve is inelastic. b) if firms reduce the wage paid to labor. c) because of the law of diminishing returns.

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Answers (2)

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June Dodson · Answer 1

The correct answer is c) because of the law of diminishing returns.

Explanation:

The law of diminishing returns establishes that if all the other productive factors are kept constant and only one productive factor increases, the total production will increase less and less. In other words, what this law refers to is the fact that adding an element, which until then had been the best option, ceases to be, that is, that there is a better alternative, but from which it is crossed the line of diminishing returns is no longer the best option, it may even be counterproductive.

Van · Answer 2

Option C. because of the law of diminishing returns.

Explanation:

The law of diminishing returns states that as more of any particular input is added, while holding all the other inputs constant, its marginal product will eventually decline. Therefore, as marginal productivity declines, so does marginal revenue.

In the scenario presented above, the marginal productivity of each successive addition of labor, will eventually lead to an increase which is less than proportionate.