In the short run, if a firm increases its labor input, the marginal product of labor will initially rise due to specialization. However, after a certain point, the marginal product begins to decline. How does this phenomenon affect the firm's total costs?

When a firm increases the number of workers, each worker can focus on specific tasks, which makes them more efficient. This efficiency leads to an increase in the marginal product of labor, meaning each additional worker adds more to the output initially. However, as more workers are hired, they may start to get in each other's way or have less equipment to use, causing the marginal product to decline. As the marginal product decreases, the firm needs to pay more for each additional worker while getting less extra output, which raises the firm's total costs. For example, if a factory hires ten workers and produces 100 units, but when it hires the eleventh worker, production only increases to 105 units, the extra cost of that worker might not be worth the small gain in output.