Question

Suppose you were advising a company that is experiencing a decline in marginal returns. what two steps might you recommend

Answer 1

1. Often, as more people are added to a single job, the marginal return decreases (Brook's law). This is due to several reasons. With more people, communication and synchronization become increasingly difficult. Also, it takes some time for new employees to become as productive as older ones. Finally, if the work is highly divisible, it might just take them longer because they might get in each other's way. Therefore, the first advice would be to check the personnel and try to remove any employee who is superfluous.

2. Diminishing returns is the decrease on marginal output as one production factor increases and all the other ones stay the same. So another solution would be to try to increase all the other factors that have not been increased yet.