As a firm hires more labor in the short run, the
A)level of total product stays constant.
B)output per worker rises.
C)extra output of another worker may rise at first, but eventually must fall.
D)costs of production are increasing at a fixed rate per unit of output.

Question

Quizplus · Accepted Answer

In the short run, as a firm hires more labor, the output generated by each additional worker may rise initially due to specialization and division of labor, but eventually, the additional output will begin to decrease, reflecting diminishing marginal returns. As the firm hires more labor, the output per worker will eventually decrease, leading to a decrease in the extra output generated by each additional labor unit.

As a Firm Hires More Labor in the Short Run