Question

T or F. Diminishing marginal returns can be associated with the popular notion of "too many cooks in a kitchen," in the sense that as we increase the number of people cooking in a reduced space they may bump into each other and therefore not be as productive as they would be in a larger workplace.

True

False

Answer 1

Answer : True.

When workplace is limited then if we continuously increase the number of cooking people then total productivity will increase but marginal productivity will decrease. Because if only one factor of production is continuously increase remaining other factors of production as constant then total productivity level increase but the marginal productivity level decrease. When marginal productivity level decrease for one factor of production then it is called diminishing marginal returns to that factor. Therefore, the given statement is true.