Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 13 - Wage Determination - Quick Quiz for Figure 13.3 - Page 270: 2

Answer

B.) the law of diminishing returns applies

Work Step by Step

When the quantity of labor increases wages fall to accompany the greater capacity of workers, the law of diminishing returns applies. After all, the law of diminishing returns refers to the idea that at some point, the amount gained by adding a unit of production (like a worker) will begin to have a smaller and smaller return.
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