When the output added by each additional worker is proportionally less, what it shows?

Option 1 -> When marginal product falls, average product doesn't necessarily rise; it depends on whether MP is above or below AP.

Option 2 -> This contradicts the scenario; if each worker adds less output, marginal product cannot be rising.

Option 3 -> This directly describes the situation where each additional worker contributes less output than the previous one.

Option 4 -> Marginal product rising contradicts the given scenario of proportionally less output.

Hence, Option 3: Marginal product falls -> When the output added by each additional worker is proportionally less, it demonstrates the Law of Diminishing Marginal Returns. This means the Marginal Product (MP) - the additional output produced by hiring one more worker - is decreasing. For example, if the 1st worker adds 10 units, 2nd adds 8 units, and 3rd adds 6 units, the marginal product is falling (10→8→6), showing each additional worker contributes less than the previous one. This typically occurs when fixed factors (like capital or land) become constraining as more variable factors (labor) are added. -> correct