If hiring one more worker causes the average product of labor to fall,then:
A) the marginal product of labor is less than the average product of labor.
B) the marginal product of labor is equal to the average product of labor.
C) the marginal product of labor is greater than the average product of labor.
D) the marginal product of labor is negative.

Question

Quizplus · Accepted Answer

If the addition of one more worker causes the average product of labor to fall, then it means that the new worker is producing less output than the previous workers. Therefore, the marginal product of labor must be less than the average product of labor. This relationship between marginal and average product of labor is known as the law of diminishing returns.

If Hiring One More Worker Causes the Average Product of Labor