JAMB Economics 1983 Question 9

Question 9

Theory of Production

If successive units of labour are added to a piece of land while capital and technology remain constant, a point will be reached in the level of production when each added unit of labour will add less to the output than previous units of labour. This concept is known as

  1. A.the productivity of labour
  2. B.the law of diminishing marginal utility
  3. C.the law of diminishing returns
  4. D.the concept of factor intensity
  5. E.labour intensive production.
Show the answer and explanation

Answer: C (the law of diminishing returns)

Explanation

When more of a variable factor is added to fixed factors, its marginal product eventually falls: the law of diminishing returns.