To increase marginal return, a company might consider which of the following actions?

• A. Reducing the number of workers without changing output
• B. Increasing fixed costs while keeping variable costs constant
• C. Decreasing the quality of inputs used in production
• D. Improving the efficiency of production processes

Answer: (D)

Verified step by step guidance

1. Understand the concept of marginal return, which refers to the additional output produced by adding one more unit of a variable input, typically labor, while keeping other inputs constant.
2. Analyze how reducing the number of workers without changing output affects marginal return: since output remains the same but fewer workers are used, the marginal return per worker might increase, but this is not a typical way to increase marginal returns as it may not be sustainable.
3. Consider the effect of increasing fixed costs while keeping variable costs constant: fixed costs do not affect marginal returns directly because marginal return depends on variable inputs and their productivity, not on fixed costs.
4. Evaluate the impact of decreasing the quality of inputs: lower quality inputs generally reduce productivity and thus decrease marginal returns, so this action would not increase marginal return.
5. Recognize that improving the efficiency of production processes increases the output produced from each additional unit of input, thereby increasing the marginal return, which is why this is the correct action to take.