In the short run, marginal product of labour increases at first and then falls because
A)as more labour is hired, they are not as skilled as the first ones hired.
B)there are fewer opportunities for division of labour and specialisation 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 marginal product of labour initially increases as more workers are hired due to the benefits of division of labour and specialisation. However, as the number of workers increases, it becomes more difficult to coordinate their efforts and allocate tasks efficiently, leading to a decline in marginal product of labour. Therefore, option B is the best choice. Options A, C, and D are not relevant to the trend in marginal product of labour.

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