Inventia has 1 million workers.Suppose 50,000 workers migrate from a neighboring country to join Inventia's workforce.Which of the following will happen in this case if Inventia's physical capital stock remains unchanged?
A) The marginal contribution of labor to Inventia's output will fall.
B) The relationship between output and physical capital stock becomes negative.
C) The total efficiency units of labor in the economy will decrease.
D) The country's income per worker will increase.

Question

Quizplus · Accepted Answer

With the addition of 50,000 workers, the total labor force in Inventia increases, but the physical capital stock remains the same. This means that each worker will have access to the same amount of physical capital, leading to diminishing marginal returns to labor. As a result, the marginal contribution of labor to Inventia's output will fall.

Inventia Has 1 Million Workers