The assumption that the marginal product of labor decreases as the labor input increases implies that
A) output decreases as the labor input increases.
B) the wage increases as the labor input increases.
C) the production function is concave.
D) the production function shifts upward.

Question

Quizplus · Accepted Answer

The assumption that the marginal product of labor decreases as the labor input increases implies that the production function is concave, meaning that the rate of increase in output diminishes as the amount of labor increases. This is a common characteristic of many production functions in real-world settings. Choices A, B, and D are not necessarily true based on this assumption alone.

The Assumption That the Marginal Product of Labor Decreases as the Labor