In general, as employment increases, the marginal return to labor increases and then decreases as employment continues to increase.

Question

Quizplus · Accepted Answer

This is because at first, as more labor is added, the increase in production is greater than the increase in labor cost. However, as more and more labor is added, the increase in production becomes less and less, and the cost of hiring additional workers becomes more expensive.

In General, as Employment Increases, the Marginal Return to Labor