In the short run, marginal product of labor increases at first and then falls because
A)as more labor is hired, they are not as skilled as the first ones hired.
B)there are fewer opportunities for division of labor and specialization when fewer workers are hired.
C)managerial inefficiency sets in when a firm gets too large.
D)the new workers do not have as much experience as those who have been with the firm for a long time and therefore are not as productive.

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns states that as more units of a variable input (labor) are added to a fixed input (capital), the marginal product of that variable input will eventually decrease. In the short run, there are typically fixed inputs, such as the amount of machinery or space available, which limits the opportunities for division of labor and specialization. As more workers are added, they will initially increase the production output due to division of labor and specialization, but eventually the fixed inputs will become a constraint and the productivity of each additional worker will decline, leading to diminishing marginal returns.

In the Short Run, Marginal Product of Labor Increases at First