Question: Michelle s business produces ceramic cups using labor clay and a

Michelle’s business produces ceramic cups using labor, clay, and a kiln. She produces cups using a fixed proportion of labor and clay, but regardless of how many cups she produces, she uses only one kiln. She can manufacture 25 cups a day with one worker and 35 with two workers. Does her production process illustrate decreasing returns to scale or a diminishing marginal product of labor? What is the likely explanation for why output doesn’t increase proportionately with the number of workers?

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  • CreatedNovember 13, 2014
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