If a firm increases its employment levels, how does this typically affect the marginal revenue product of labor, according to the labor demand curve?

When a firm hires more workers, the marginal revenue product of labor usually decreases. This happens because each additional worker contributes less to total output than the previous one, a concept known as diminishing returns. For example, imagine a bakery that has one baker making 10 loaves of bread per hour. If they hire a second baker, together they might make 18 loaves, but if they hire a third, they may only produce 24 loaves, showing that each new worker adds less to total production. As a result, the extra revenue generated by each additional worker also tends to decline.