Declining marginal product of labor
A) is needed if competitive firms are to stop hiring workers at some point.
B) allows firms to make the most profit.
C) mainly exists because workers get tired after many hours of work.
D) implies workers get more productive as more of them are hired.

Question

Quizplus · Accepted Answer

The declining marginal product of labor indicates that each additional unit of labor contributes less to output than the previous unit, eventually leading to a point where the cost of hiring an additional worker is greater than the value of their contribution to output. Thus, firms stop hiring at this point to maximize profits.

Declining Marginal Product of Labor