As a firm hires more workers, holding capital and other factors constant, the marginal physical product of labor declines because

Question

Quizplus · Accepted Answer

As the number of workers increases, each worker has less capital and other factors to work with, leading to a decrease in the marginal physical product of labor. This is due to diminishing returns, not diseconomies of scale, less efficient workers, or poor teamwork.

As a Firm Hires More Workers, Holding Capital and Other