A firm has two factories, one twice as large as the second. As the number of workers at each factory increases, which factory will experience diminishing returns first?

Question

Rojas

Business

28 February, 10:24

A firm has two factories, one twice as large as the second. As the number of workers at each factory increases, which factory will experience diminishing returns first?

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Answers (1)

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Georgia Fowler · Answer 1

The smaller factory will face diminishing returns first.

Explanation:

The smaller factory will most likely have fewer resources as compared to the larger one. The amount of capital will also be comparatively lower. It will also be producing a lower output.

So, when the number of workers in both the factories has increased the workers in the smaller factory will need to operate with less capital. So, they are likely to face diminishing returns first.