As firms hire more labor
A)the supply of labor increases.
B)each additional worker hired produces an additional amount of output but at a diminishing rate.
C)each additional worker hired produces an additional amount of output but at an increasing rate.
D)the marginal labor cost of output decreases.

Question

Quizplus · Accepted Answer

This is the law of diminishing marginal returns, which states that as more units of a variable input (labor) are added to a fixed input (capital), the additional output (marginal product) will eventually decrease, ceteris paribus. Therefore, each additional worker hired produces an additional amount of output but at a diminishing rate.

As Firms Hire More Labor