-Exhibit H-1 shows the change in the short-run production of pizzas as more workers are hired. The table shows the marginal product of the labor input is decreasing with the hiring of the third worker. A possible reason for this diminishing marginal product is
A) decreases in wages
B) increases in plant size
C) decreases in fixed cost
D) increases in division of labor as additional workers are hired
E) decreases in labor productivity

Question

-Exhibit H-1 shows the change in the short-run production of pizzas as more workers are hired. The table shows the marginal product of the labor input is decreasing with the hiring of the third worker. A possible reason for this diminishing marginal product is
A) decreases in wages 
B) increases in plant size 
C) decreases in fixed cost 
D) increases in division of labor as additional workers are hired 
E) decreases in labor productivity

Quizplus · Accepted Answer

The diminishing marginal product occurs when adding an additional factor of production results in a smaller increase in output. This is often due to the fact that, as more workers are hired, they have less equipment or space to work with efficiently, leading to decreases in labor productivity.

-Exhibit H-1 Shows the Change in the Short-Run Production of Pizzas