Question

The shape of the typical short-run production function of a factory has first a range of employment where increasing returns exist and then a range of employment where decreasing returns exist because

Group of answer choices

the earlier workers hired are the best workers and later hires are of lower quality.

the factory is highly productive when it is new, but it becomes less productive as it ages. The diminishing returns notion picks up the aging problem of capital.

the factory has too few workers for its size at low output levels so as the number of workers increase the mix of capital and labor inputs is more desirable and increasing returns result. However, as labor increases the factory has too many laborers to be efficient.

all of the above.

none of the above.

Answer 1

C) The factory has too few workers for its size at low output levels so as the number of workers increase the mix of capital and labour inputs is more desirable and increasing returns result.however as labour increases the factory has too many laborers to be efficient.

This the reason that the shape of the typical short run production function of a factory has first a range of employment where increasing returns exists and then a range of employment where decreasing returns exists.