Question

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, we observe the property of:a. diminishing Labor. b. diminishing output. c. diminishing marginal product of Labor. d. negative marginal product.

Answer 1

Answer:

The correct answer is letter "C": diminishing marginal product of Labor.

Explanation:

The diminishing marginal product of Labor is based on the diminishing marginal returns law that establishes as long as input keeps being added there will be a point in which the output increases in a decreasing rate. In the case of the diminishing marginal product of Labor, what happens is that as more workers are hired in a company, there will be less space for all of them to work.

Therefore, the productivity of adding more employees, under those circumstances, increase productivity but in lower levels.