Why does marginal product initially rise and eventually fall as more workers are hired?

• A. Because changes in market demand first boost output per worker and later reduce it, causing an initial rise and subsequent fall in marginal product.
• B. Because adding workers increases total output but reduces the average quality of output, so marginal product falls due to lower-quality production.
• C. Because firms always experience learning-by-doing so marginal product keeps rising indefinitely as more workers are hired.
• D. Because early hires permit greater specialization and division of labor which raises marginal product, but as more workers share fixed capital and space, congestion and diminishing marginal returns cause marginal product to fall.

Answer: (D)