In this example, when do diminishing returns set in?

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BlackTom AI · Accepted Answer

Let’s examine what diminishing returns means in this context: as you add more workers to a fixed set of resources, the incremental gain from each additional worker eventually starts to lessen.
Option a: After the sixth worker. If diminishing returns were to begin this late, it would imply that the first five workers all contributed significant, nearly constant gains. In many typical production examples, the peak of marginal productivity occurs earlier, so claiming it starts at six would usually misplace the point where additional workers stop adding as much as before.
Option b: After the fourth worker. This suggests the fourth worker is the turning point initiating diminishing returns. However, without data showing the marginal contributions of each worker, asserting four is not justified. The turning point could occur sooner or later depending on the specific production schedule.
Option c: After the seventh worker. Similar to option a, pushing the onset of diminishing returns to seven assumes continued high marginal gains beyond six, which contradicts the common pattern where the slowdown appears earlier as crowding increases.
Option d: After the third worker. This aligns with many standard illustrations where the first two workers produce large, efficient gains, and the third worker marks the shift to smaller incremental increases, indicating the onset of diminishing returns.
In summary, evaluating each option against the core idea—that incremental output begins to decline after a certain point as more workers are added with fixed resources—points toward the third worker as the moment diminishing returns set in in this example.

MUF0061 Economics Unit 1 - Semester 2, 2025 Revision: The Law of Diminishing Returns - Video and Quiz

In this example, when do diminishing returns set in?

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