Other things held constant, after some point hiring additional units of labor will cause the marginal physical product of labor to decline because

Question

Quizplus · Accepted Answer

The law of diminishing marginal product states that as additional units of a variable input (in this case, labor) are added to a production process, while all other factors are held constant, eventually the increase in output resulting from an additional unit of that input will decrease. This is because each additional unit of labor has less and less impact on the total output of the firm. Therefore, after some point, hiring additional units of labor will cause the marginal physical product of labor to decline.

Other Things Held Constant, After Some Point Hiring Additional Units