A factory notices that hiring a fourth worker leads to only a slight increase in total output. What principle explains this phenomenon?

The phenomenon where hiring a fourth worker leads to only a slight increase in total output is explained by the principle of diminishing marginal returns. This principle states that as you add more of a specific input, like labor, to a fixed amount of other resources, such as machinery or space, the additional output gained from each new worker will eventually start to decrease. For example, if three workers can efficiently use the machines and space available, adding a fourth worker might cause crowding or limit each worker's ability to contribute effectively, leading to less than proportional output increase. This means that while more workers can help, there is a point where each additional worker adds less value than the one before. Therefore, the factory should consider how many workers it needs to maximize productivity without overcrowding its resources.