Question

exhibit 7-3 a marginal product curve
as shown in exhibit 7-3, the law of diminishing returns applies where there are:
a. more than 5 workers per day.
b. fewer than 5 workers per day.
c. fewer than 2 workers per day.
d. between 2 and 5 workers per day.

Explanation:

The law of diminishing returns starts when marginal product begins to decline. On the graph, the marginal product (MP) curve peaks at 5 workers, then decreases as more workers are added beyond this point. This means diminishing returns apply when the number of workers exceeds 5 per day.

Answer:

a. more than 5 workers per day.