As more labor is hired by a firm over the short run, the marginal product of each additional unit of labor will eventually decrease because of:

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 (like capital), the additional output produced by each new unit of input will eventually decrease. This principle explains why the marginal product of labor decreases over time in the short run when other inputs are held constant.

As More Labor Is Hired by a Firm Over the Short