Which of the following statements is true?
A)If the price of labor hired by a firm increases, holding everything else constant, the demand for labor will increase.
B)If the quantity of labor hired by a firm increases, holding everything else constant, the marginal product of labor will fall.
C)If the quantity of labor hired by a firm increases, holding everything else constant, the marginal product of labor will rise.
D)If the quantity of labor hired by a firm increases, holding everything else constant, the value of the marginal product of labor will rise.

Question

Quizplus · Accepted Answer

According to the law of diminishing marginal returns, as more units of a variable input (like labor) are added to a fixed input, the additional output produced by each additional unit of labor will eventually decrease.

Which of the Following Statements Is True