If a factory increases labor input while keeping machinery constant, and the additional output from each new worker begins to decline, how might this affect the marginal cost of production?

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Seekh · Accepted Answer

When a factory adds more workers but the machines stay the same, the first few workers can use the equipment efficiently and raise output a lot. As more workers are hired, each new worker contributes less and less extra output, a phenomenon called diminishing marginal product. Because the extra worker is producing fewer units, the cost of producing one more unit rises; this is the marginal cost. For example, if adding a tenth worker only adds five more units while the cost of that worker is fixed, the cost per unit goes up compared to the ninth worker who added ten units. Thus, the marginal cost of production climbs as the marginal product falls.

If a factory increases labor input while keeping machinery constant, and the additional output from each new worker begins to decline, how might this affect the marginal cost of production?

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