Suppose that you run a house-painting company and currently have 2 workers paint

Question

Suppose that you run a house-painting company and currently have 2 workers painting a total of 4 houses per month. If you hire a third worker, 6 houses can be painted per month. If you hire a fourth worker, 9 houses can be painted, and a fifth and sixth worker will increase the number of houses painted to 13 and 15, respectively. Diminishing returns

Select one:

a. set in when the fourth worker is hired.

b. set in when the fifth worker is hired.

c. set in when the sixth worker is hired.

d. have not yet set in because output is still increasing.

Explanation / Answer

Answer
c. set in when the sixth worker is hired.
The diminishing product is where the marginal product of labor decrease
the marginal product of n labor=total product of n labor - the total product of n-1 labor
MP(3)=6-4=2
MP(4)=9-6=3
MP(5)=13-9=4
MP(6)=15-13=2
The diminishing return sets in at 6 th unit of labor
option c

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