Asked by Morgan Whittle on May 09, 2024
Verified
As more labor is added to a fixed amount of capital,eventually the marginal product of labor decreases.
Marginal Product
The additional output resulting from a one unit increase in a particular input, holding other inputs constant.
Labor
The effort by workers to produce goods or provide services in exchange for payment.
Capital
Assets used in the production of goods and services, often categorized as physical (like machinery) or financial (like money at hand).
- Grasp the concept of diminishing returns and its effects on cost and production.
Verified Answer
NC
Nicholas CrolweyMay 10, 2024
Final Answer :
True
Explanation :
This is the law of diminishing returns, which states that as more units of a variable input (in this case, labor) are added to a fixed input (in this case, capital), eventually the marginal product of the variable input will decrease. This occurs because the fixed input becomes a limiting factor on production.
Learning Objectives
- Grasp the concept of diminishing returns and its effects on cost and production.
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