One would expect to observe a diminishing marginal product of labour when crowded office space reduces the productivity of new workers.

Question

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Diminishing marginal product of labour occurs when the addition of one more unit of labour results in a smaller increase in output. Crowded office space can lead to a decrease in productivity of new workers, which means that each additional worker incrementally contributes less and less to the output, resulting in diminishing marginal productivity of labour.

One Would Expect to Observe a Diminishing Marginal Product of Labour