Question

The marginal product of labor is 110 cups for the first worker, 90 cups for the second worker, and 70 cups for the third worker. The MPL declines due to the principle of diminishing returns to labor. The marginal product of labor is 110 cups for the first worker, 90 cups for the second worker, and 70 cups for the third worker. The MPL declines due to the principle of spreading the overhead. The marginal product of labor is 70 cups for the first worker, 90 cups for the second worker, and 110 cups for the third worker. The MPL increases due to the principle of diminishing returns to labor. The marginal product of labor is 110 cups for the first worker, 70 cups for the second worker, and 90 cups for the third worker. The MPL declines due to the principle of diminishing returns to labor.1. What is the marginal product of the first worker, the second worker, the third worker? 2. Why does the marginal product of labor (MPL) decline as the number of workers increases?

Answer 1

The MPL declines due to the principle of diminishing returns to labor.

The principle or law of dimishing returns to labor establishes that as a company hires additional workers, it reaches a point in which production is optimal, and after that point, hiring more workers reduces efficiency. This means that each additional worker produces less output (has a lower marginal productivity).

Why does the marginal product of labor (MPL) decline as the number of workers increases?

As explained above, when a firm hires workers, there is a point in which output is at the most efficient point. If the firm continues hiring after this point, every additional worker will add less output.