Assuming diminishing marginal product of additional workers and diminishing marginal product of additional hours-per-worker, how would a...

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Economics

Assuming diminishing marginal product of additional workers anddiminishing marginal product of additional hours-per-worker, howwould a profit-maximizing firm adjust its mix of workers (L) andhours-per-worker (H) in response to: (a) A new user-friendlycomputer system that reduces training time required by one-half?(b) New legislation requiring full-time workers to receiveemployer-sponsored health insurance?

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Answer The law of diminishing marginalreturns states that an additional factor of production results insmaller increases in output at some pointIn our case a factory employs workers to manufacture itsproducts and at some point the company operates at an optimallevel With other production factors constant adding additionalworkers beyond this optimal level will result in less efficientoperationsAt a certain pointusing an additional factor of production causes a fairly smallerincrease See Answer

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