We assume that when a firm hires additional workers, the marginal physical product of labor will:


1. decrease because each worker now has less capital and other resources to work with.
2. decrease because the new workers are likely to be less able than the previously hired ones.
3. increase because more workers can always get more work done.
4. increase because large firms are more efficient.

I think its Number 1 because since you have more workers there is less space, but unsure.

To determine the correct answer, let's break down the options and evaluate them one by one.

Option 1 suggests that the marginal physical product of labor will decrease because each worker now has less capital and other resources to work with. This option is consistent with the concept of diminishing marginal returns, which states that as additional units of a variable input (such as labor) are added to a fixed amount of other inputs (such as capital), the marginal product of that input will eventually decrease. When firms hire more workers, there will be a point where each additional worker has less capital and other resources to work with, leading to a decrease in their productivity. So option 1 is a plausible explanation for why the marginal physical product of labor may decrease.

Option 2 suggests that the marginal physical product of labor will decrease because the new workers are likely to be less able than the previously hired ones. This option assumes that the quality or skill level of the new employees is lower, which can lead to a decline in overall productivity. While this is a possibility, it is not always the case. New workers can also bring in fresh ideas and perspectives, which might actually increase productivity. Therefore, option 2 may not be the most accurate explanation in all scenarios.

Option 3 suggests that the marginal physical product of labor will increase because more workers can always get more work done. While it is true that having additional workers can increase the overall output of a firm to some extent, this statement oversimplifies the relationship between labor and productivity. As mentioned earlier, diminishing marginal returns suggest that the productivity gains from adding more and more workers will eventually decline. Therefore, option 3 is an overly optimistic assessment of the impact of additional workers.

Option 4 suggests that the marginal physical product of labor will increase because large firms are more efficient. This option is not directly related to the impact of hiring additional workers. It implies that the size of the firm itself is the determinant of increased productivity, which may not necessarily be true. Efficiency depends on a variety of factors beyond just the size of the firm, such as technology, management practices, and the specific industry.

Considering the explanations provided, option 1 is the most reasonable answer. When a firm hires additional workers, the marginal physical product of labor is likely to decrease due to diminishing marginal returns. However, it is important to note that the impact of hiring additional workers on productivity may vary depending on the specific circumstances, including the level of resources available, the skills of the workers, and other factors at play.