Typically, as a firm hires additional workers, the marginal product of labor
A)decreases, and the value of the marginal product of labor decreases.
B)stays constant, and the value of the marginal product of labor decreases.
C)decreases, and the value of the marginal product of labor stays constant.
D)decreases, and the value of the marginal product of labor increases.

Question

Quizplus · Accepted Answer

As more workers are hired, the law of diminishing marginal returns sets in, causing the marginal product of labor to decrease. This means that each additional worker added to the production process increases output by a smaller and smaller amount. Additionally, as the marginal product of labor decreases, the value of the marginal product of labor also decreases. This is because the firm must pay all workers the same wage rate, regardless of their individual productivity, so the decreasing marginal product of each additional worker means that the incremental revenue generated by that worker is also decreasing.

Typically, as a Firm Hires Additional Workers, the Marginal Product