Scenario 13-20
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-20. Average total cost will be
A)rising at all points.
B)falling at all points.
C)constant.
D)U-shaped.

Question

Quizplus · Accepted Answer

Since the firm is experiencing decreasing marginal product of labor, it means that additional workers are becoming less productive. This will cause the cost of producing each additional unit to increase, leading to a U-shaped average total cost curve.

Scenario 13-20 Suppose That a Given Firm Experiences Decreasing Marginal Product of Product