The correct answer is (B) Total output increases at a decreasing rate as you increase the quantity of labor.
The following table shows the marginal product of the labor inputs.
Its production function of Larry is given below.
The law of diminishing marginal product of labor is demonstrated by b. Total output increases at a decreasing rate as you increase the quantity of labor.
By definition, diminishing marginal product shows that the marginal product decreases as additional units of factors increase. However, the total output first increases at an increasing rate, then increases at a decreasing rate until it reaches the maximum peak point, after which it starts to fall.
The complete question is:
Larry's Performance Pizza is a small restaurant in New York City that sells gluten-free pizzas. Larry's very tiny kitchen has barely enough room for the two ovens in which his workers bake the pizzas. Larry signed a lease obligating him to pay the rent for the two ovens for the next year. Because of this, and because Larry's kitchen cannot fit more than two ovens, Larry cannot change the number of ovens he uses in his production of pizzas in the short run.
However, Larry's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Larry lets them know how many workers he needs for each day of the week. In the short run, these workers are _____ inputs and the ovens are _____ inputs.
Larry's daily production schedule is presented in the following table.
Fill in the blanks to complete the Marginal Product of Labor column for each worker.
Plot Larry's production function.
The law of diminishing marginal product of labor is demonstrated by which of the following?
a. Total output declines as you increase the quantity of labor,
b. Total output increases at a decreasing rate as you increase the quantity of labor.
c. Total output increase only when you increase both labor and ovens.
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