Which statement is TRUE? Diminishing returns is said to occur as the marginal pr
ID: 1165813 • Letter: W
Question
Which statement is TRUE?
Diminishing returns is said to occur as the marginal productivity of labor falls when a firm adds additional workers to a fixed amount of capital.
Constant returns to scale is said to occur when a firm doubles the amount of labor it uses and output doubles.
The average productivity of labor falls because the more labor a firm hires the more difficult it becomes for the firm's managers to coordinate the activity of their workers.
If the technology that a firm uses is characterized by increasing returns to scale, then they can reduce their cost of production by increasing the amount of labor they hire.
Negative returns occurs as a firm doubles all its inputs and its output decreases.
Diminishing returns is said to occur as the marginal productivity of labor falls when a firm adds additional workers to a fixed amount of capital.
Constant returns to scale is said to occur when a firm doubles the amount of labor it uses and output doubles.
The average productivity of labor falls because the more labor a firm hires the more difficult it becomes for the firm's managers to coordinate the activity of their workers.
If the technology that a firm uses is characterized by increasing returns to scale, then they can reduce their cost of production by increasing the amount of labor they hire.
Negative returns occurs as a firm doubles all its inputs and its output decreases.
Explanation / Answer
"Diminishing returns s said to occur as the marginal productivity of labor falls when a firm adds additional workers to a fixed amount of capital"
Constant return is not limited only to a labor but involves the whole input which includes capital, the average productivity fall due to diminishing return, in increasing the return to scale they can decrease the cost by increasing production not hiring more. there is no such thing as a negative return. The answer is "A".
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