why do firms that find the marginal productivity of the labor force falling find costs are rising?

Answer 1

Because, by definition, a decline in marginal productivity of labor (assuming that fixed capital, i.e. the technological basis for producing goods or services, remains constant) means that they are experiencing diminishiing return on capital. Each added unit of output costs more than the previoius one; the average of all costs of production is higher than before.

A personal perspective: The theoretical situation is addressed by methods such as replacing older technolog with more efficient, newer technology if it can be found, shifting production to new locations where labor costs are lower, finding new ways of externalizing all or some costs (including, in the real world, lobbying for direct subsidies or iindirect subsidies like tax breaks), or contracting out for all or pars of production). Since almost all of these effects are costs to society, there is a general social interest (not just an individual firm's interest) in rises of proiductivity. In my opinion, this can constitute the link between microeconomics (economy of the firm) and macroeconomics (economy of society) in the new economics of 21st century globalized technology.

Answer 2

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