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, the firm is experiencing
A)diminishing labor.
B)diminishing output.
C)diminishing marginal product.
D)negative marginal product.

Question

Quizplus · Accepted Answer

Diminishing marginal returns or diminishing marginal product occurs when adding an additional unit of labor leads to smaller increases in output compared to previous units of labor. This is a common phenomenon in production and occurs due to factors such as limited resources, fixed capital, and diminishing efficiency of labor.

When Adding Another Unit of Labor Leads to an Increase