Exhibit 21-8 Exhibit 21-8 shows how output varies with the only variable input used in its production. The table indicates that diminishing marginal returns set in with the hiring of which unit of labor?
A)first
B)second
C)third
D)fourth
E)fifth

Question

Exhibit 21-8  Exhibit 21-8 shows how output varies with the only variable input used in its production. The table indicates that diminishing marginal returns set in with the hiring of which unit of labor?
A)first 
B)second 
C)third 
D)fourth 
E)fifth

Quizplus · Accepted Answer

Diminishing marginal returns set in when the marginal product of the variable input (in this case labor) decreases after a certain level of input. In this table, the marginal product of labor starts decreasing from the third unit of labor onwards, indicating that the third unit of labor is where diminishing marginal returns set in.

Exhibit 21-8 Exhibit 21-8 Shows How Output Varies with the Only