Final answer:
The marginal physical product of labor declines as more workers are hired due to the law of diminishing marginal productivity, which occurs when additional workers have less capital to work with, causing productivity gains to decrease.
Step-by-step explanation:
As additional workers are hired, the marginal physical product of labor declines. This concept is known as the law of diminishing marginal productivity, which states that while a firm may increase its workforce, there comes a point where the additional output attributed to each new worker will start to decrease. This happens because all other factors of production, like capital and technology, are held constant, meaning there's a limited amount of resources that additional workers can use to contribute to output.
Therefore, in the context of the provided information, 'marginal product of labor' refers to the extra output a firm gains by hiring an additional worker. Given fixed capital, as more workers are added, they have less capital to work with, and so each new worker adds less to the total output than the previous one, resulting in a decline in the marginal product.