The marginal physical product of labor for the most recent worker hired by a company is 100. If this company were to hire an additional worker we would expect the marginal physical product of labor to

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns states that as more units of a variable input (in this case, labor) are added to a fixed amount of other inputs (such as capital or land), the marginal product of that variable input will eventually decrease. Therefore, if the most recent worker hired has a marginal physical product of 100, it is likely that the next worker hired will have a lower marginal physical product. Option A is incorrect because, as stated, the law of diminishing marginal returns holds true. Option C is incorrect because the question does not provide any information on the next worker's productivity being above a small amount. Option D is incorrect because there cannot be an infinite marginal product of labor.

The Marginal Physical Product of Labor for the Most Recent