If the first worker produces ten custom picture frames a day, and the second worker produces twelve additional custom picture frames a day, then diminishing marginal returns have not yet set in.

Question

Quizplus · Accepted Answer

Diminishing marginal returns refer to a decrease in the incremental output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors constant. The scenario described does not indicate a decrease in output per worker, but rather shows their individual production rates, hence diminishing marginal returns have not been demonstrated.

If the First Worker Produces Ten Custom Picture Frames a Day