Question

1) For a firm that hires laborers, if production increases at a decreasing rate what does this indicate?

A. Profit margins are going down.

B. There is increasing marginal returns to hiring workers.

C. There is diminishing returns to hiring more labor

D. Foreign competition is hiring too many cheap laborers.

2) If costs are falling over a large range of output, this indicates there are decreasing returns to scale.

- True or False

Answer 1

PLEASE RATE THE ANSWER
Answer
1) C.  . There is diminishing returns to hiring more labor

If the production is increaseng at a decreasing rate , it means with the use of labour , the marginal product of labour is decreasing . Option a and d are irrelevant to the question as we are talking about labour productivity.


2) False
If the costs are falling over a large range of output , this indicates there are increasing returns to scale.As the prodcution is increasig the labour to capital ratio is improving and costs of production are falling.