The division of labor and specialization explain
A)why, when the marginal product of labor increases, so does the average product of labor.
B)why the average product of labor falls when firms use more capital or change the layout of their businesses.
C)why the marginal product of labor rises as a firm hires its first units of labor.
D)why firms may find it profitable to use more workers when the marginal product of labor is negative.

Question

Quizplus · Accepted Answer

The division of labor and specialization allow workers to focus on specific tasks and become more skilled and efficient at completing those tasks, leading to an increase in the marginal product of labor as more workers are hired. This, in turn, leads to an increase in the average product of labor. As a firm uses more capital or changes its business layout, it may disrupt the division of labor and specialization, leading to a decrease in the average product of labor. Firms generally do not find it profitable to use more workers when the marginal product of labor is negative, as this would lead to a decline in productivity and profits.

The Division of Labor and Specialization Explain