The law of diminishing marginal product of labor is demonstrated by which of the following

What is the law of diminishing marginal product of labor?

The assumption of diminishing marginal product of labour means that, in order to work more, workers must be offered a higher real wage. … This means that as labour use increases the amount of extra output that is gained from an increase in labour input becomes smaller.

Which of the following explains diminishing marginal returns?

Which of the following best describes the law of diminishing marginal returns? When more and more of a variable resource is added to a given amount of a fixed resource, the resulting change in output will eventually diminish and could become negative. … The change in total cost resulting from a one-unit change in output.

What is diminishing marginal product?

The law of diminishing marginal returns states that when an advantage is gained in a factor of production, the marginal productivity will typically diminish as production increases. This means that the cost advantage usually diminishes for each additional unit of output produced.

What is an example of law of diminishing returns?

A Farmer Example of Diminishing Returns

Consider a corn farmer with one acre of land. In addition to land, other factors include quantity of seeds, fertilizer, water, and labor. … As he increases the amount of fertilizer, the output of corn will increase.

What is the relationship between marginal product and average product of Labour?

Marginal Product (MP) of labor is the increase in output resulting from a one-unit increase in the amount of labor employed. Average Product (AP) of labor equals total output divided by the amount of labor employed.

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What is marginal cost formula?

A business’s marginal cost is the cost required to make one additional unit of a product. The marginal cost formula is the change in total production costs—including fixed costs and variable costs—divided by the change in output.

Which of the following best describes the relationship between diminishing marginal returns and marginal cost?

Which of the following best describes the relationship between diminishing marginal returns and marginal cost? If marginal returns are diminishing while output increases, marginal cost must be increasing.

What is true of marginal cost when marginal returns are decreasing quizlet?

If a firm is experiencing diminishing marginal returns, its marginal product is declining. What is true of marginal cost when marginal returns are decreasing? a. It is negative and increasing.

Does the shape of the production function reflect the law of diminishing marginal returns?

The shape of the production function reflects the law of diminishing marginal returns. – Adding one worker to the production process (without increasing the amount of capital) means that each worker has less capital to work with. – Therefore, each additional unit of labor adds less output than the last.

What is the formula for marginal product?

The marginal product formula is the change in quantity (Q) of items produced divided by the change in one unit of labor (L) added (change in Q divided by change in L). The denominator in this equation is always one because the formula is based on each one unit of increase in labor.

What is an example of diminishing marginal utility?

The law of diminishing marginal utility explains that as a person consumes an item or a product, the satisfaction or utility that they derive from the product wanes as they consume more and more of that product. For example, an individual might buy a certain type of chocolate for a while.

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When average product is decreasing marginal product is?

If marginal product is less than average product, then average product declines. If marginal product is greater than average product, then average product rises. If marginal product is equal to average product, then average product does not change.

What are the 3 stages of returns?

How does the law of diminishing returns work?

  • Stage 1: Increasing returns. Initially, adding to one production variable is likely to improve the output, as the fixed inputs are in abundance compared to the variable one. …
  • Stage 2: Diminishing returns. …
  • Stage 3: Negative returns.

What is meant by law of diminishing returns?

The law of diminishing marginal returns is a theory in economics that predicts that after some optimal level of capacity is reached, adding an additional factor of production will actually result in smaller increases in output.

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