The shape of the marginal cost curve tells a producer something about the marginal product of her workers.

Question

Quizplus · Accepted Answer

The shape of the marginal cost curve is inversely related to the marginal product of labor. When the marginal product of labor is rising, marginal costs are decreasing, and when the marginal product of labor is falling, marginal costs are increasing. This relationship is due to the fact that the cost of producing an additional unit of output (marginal cost) is influenced by the productivity of the additional labor (marginal product) used to produce that unit.

The Shape of the Marginal Cost Curve Tells a Producer