Phil found that as he continued to crowd laborers into his hot dog stand, the extra output he was receiving from each additional laborer was beginning to fall off. This is an example of the
A) law of increasing opportunities.
B) law of demand.
C) law of diminishing marginal utility.
D) law of diminishing product.

Question

Quizplus · Accepted Answer

The described situation is an example of the law of diminishing product, which states that as additional units of a variable input are added to fixed inputs, after some point the marginal product of the variable input will decline. In this case, as Phil adds more laborers to his hot dog stand, the extra output he receives from each additional laborer begins to decrease.

Phil Found That as He Continued to Crowd Laborers into His