Answer to Question #292123 in Microeconomics for jen

Question

1.       After two quarters of increasing levels of production, the CEO of Canadian Fabrication & Design was upset to learn that, during this time of expansion, productivity of the newly hired sheet metal workers declined with each new worker hired. Believing that the new workers were either lazy or ineffectively supervised (or possibly both), the CEO instructed the shop foreman to “crack down” on the new workers to bring their productivity levels up. 

Answer 1

The instruction for the shop foreman to “crack down” on the new workers to bring their productivity levels up is wrong, because decreasing marginal returns occurs when the addition of a variable input (like labor) to a fixed input (like capital) causes the variable input to be less productive.