Why is the marginal product of labor likely to increase and then decline in the short run?
When additional units of labor are added to a fixed quantity of capital, we see the marginal product of labor rise, reach a maximum, and then decline. The marginal product of labor increases because, as the first workers are hired, they may specialize in those tasks in which they have the greatest ability. Eventually, with the quantity of capital fixed, the workplace becomes congested and the productivity of additional workers declines. 3. Diminishing returns to a single factor of production and constant returns to scale are not inconsistent. Discuss. Diminishing returns to a single factor are observable in all production processes at some level of inputs. This fact is so pervasive that economists have named it the “law of diminishing marginal productivity.” By definition, the marginal product of an input is the additional output generated by employing one more unit of the input, all other inputs held fixed. The extra output, or returns, to the single input diminish because all other i
