As more output is produced, the marginal product of labour declines
A)because of the law of diminishing returns.
B)if firms reduce the wage paid to labour.
C)if the firm's output supply curve is inelastic.
D)because the firm's marginal revenue declines.

Question

Quizplus · Accepted Answer

The law of diminishing returns states that as more of one input (in this case, labor) is added to the production process, while holding all other inputs constant, the marginal product of that input will eventually decline. This is because the other inputs become relatively less abundant and less effective in supporting the increased use of the input in question. Therefore, option A is the correct choice. Options B, C, and D are not correct as they do not explain the reason behind the decline in marginal product of labor.

As More Output Is Produced, the Marginal Product of Labour