We would also assume that the output (ie talent) is subject to diminishing returns. As labour increases, the marginal revenue may initially rise but eventually decrease as they are adding more labour to their xed capital. In sports terms. fixed capital include things such as arenas}r stadiums and team transportations, in which no matter how many tickets are sold, it will not affect the fixed capital. Not unless a new stadium or other xed goods are required in the long run. The eventual decline of marginal revenue is called the law of diminishing returns. Therefore. it is ideal to increase labour up to the point where MRP equals to MC