Diminishing returns to labor occur for two primary reasons: 1)as we keep adding new workers,it becomes increasingly difficult to obtain productivity gains through additional specialization;and 2)each additional worker we add has less land and capital to work with.

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As we keep adding new workers, it becomes increasingly difficult to obtain productivity gains through additional specialization, and each additional worker we add has less land and capital to work with.

Diminishing Returns to Labor Occur for Two Primary Reasons: 1)as