Question

A firm’s short-run production function uses capital and labor as inputs. Assume the quantity of capital is fixed in the short run. The marginal product of labor will decrease as more labor is used in the short run because each unit of labor will have


zero units of capital to work with


a

fewer units of capital to work with


b

an increase in the capital-to-labor ratio


c

more units of capital to work with


d

an infinite number of units of capital to work with

Answer 1

b

As more labor is added while capital is fixed, the capital-to-labor ratio falls, so each additional worker has fewer units of capital to work with, reducing their marginal product.