Suppose there are diminishing returns to labor. If the quantity of labor hired by a firm increases, holding everything else constant, the _____ labor will _____.

Question

Quizplus · Accepted Answer

Diminishing returns to labor means that as more labor is hired, the marginal product of labor will eventually decrease. Therefore, the correct answer is B, as the marginal product of labor will fall. A, C, and D are incorrect as they do not take into account the concept of diminishing returns.

Suppose There Are Diminishing Returns to Labor