Question

The idea of diminishing returns to an input in production suggests that if a local college adds more and more custodians, the marginal product of labor for the custodial staff will ________ over time
a. increase at an increasing rate
b. increase at a decreasing rate
c. decrease
d. not change
e. increase at a constant rate.

Answer 1

Answer:

c. decrease

Explanation:

The law of diminishing marginal return confers that adding more of a unit of production while holding the other inputs constant will lead to a decline in productivity. Employing more units of a particular input will increase productivity until the optimal level is achieved. Beyond the optimal level, the benefits from an extra input will increase at a decreasing rate and eventually losses.

Adding more custodians will be beneficial up to the level only. Any extra custodians past the optimal level will cause a reduction in labor productivity.