Paper Pushers Inc. hires workers in a competitive labor market. Apart from labor, the company has no other variable inputs. The company's hourly output varies with the number of workers hired, as shown in the table below. As Paper Pushers Inc. hires more workers each our, the marginal product of labor ______.

Question

Paper Pushers Inc. hires workers in a competitive labor market. Apart from labor, the company has no other variable inputs. The company's hourly output varies with the number of workers hired, as shown in the table below.  As Paper Pushers Inc. hires more workers each our, the marginal product of labor ______.

Quizplus · Accepted Answer

The marginal product of labor initially increases as more workers are hired, but eventually starts to decrease due to diminishing returns. This is evident in the table where the marginal product of labor increases from 10 to 20 workers, but decreases from 20 to 30 workers. Therefore, the best choice is B, which indicates that the marginal product of labor decreases.