Sia
Question
Microeconomics
Posted 7 months ago
Which of the following is a way to avoid diminishing marginal returns to labor?
Choose 1 answer:
(A) Increase the amount of labor used
(B) Increase the population
(C) Increase the quantity of capital
(D) Reduce the size of plant and equipment
(E) Reduce the amount of natural resources available
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Answer from Sia
Posted 7 months ago
Solution
a
Diminishing Marginal Returns: Diminishing marginal returns to labor occur when adding an additional unit of labor results in a smaller increase in output compared to previous units. This typically happens when other factors of production, such as capital, are held constant
b
Avoiding Diminishing Returns: To avoid diminishing marginal returns to labor, it is essential to increase other factors of production alongside labor. This ensures that each additional unit of labor has sufficient resources to maintain productivity
c
Increasing Capital: Increasing the quantity of capital (e.g., machinery, tools, technology) can help maintain or even increase the productivity of additional labor. This is because capital complements labor, allowing workers to be more efficient and productive
Answer
(C) Increase the quantity of capital
Key Concept
Diminishing Marginal Returns
Explanation
Diminishing marginal returns to labor can be avoided by increasing the quantity of capital, as it provides workers with the necessary tools and equipment to maintain or enhance their productivity.
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