The _____ theory states that, in the short run, the marginal physical product of labor declines as more labor is employed.

Question

Quizplus · Accepted Answer

The law of diminishing returns states that as more units of a variable input (like labor) are added to fixed amounts of other inputs, the additional output produced by each new unit of the variable input will eventually decrease. This principle applies to the scenario described, where the marginal physical product of labor decreases as more labor is employed.

The _____ Theory States That, in the Short Run, the Marginal