Assume there is an improvement in technology that increases the marginal product of each unit of labor.This would have the effect of:
A)reducing the average total cost, average variable cost, and marginal cost of production.
B)increasing the average total cost, average variable cost, and marginal cost of production.
C)reducing the average variable cost and marginal cost of production, but average total cost would be unchanged.
D)reducing the average total cost and average variable cost of production, but marginal cost would be unchanged.

Question

Quizplus · Accepted Answer

Improvements in technology that increase the marginal product of each unit of labor make it possible for a firm to produce more output with the same amount of labor, or the same output with less labor. This efficiency gain reduces the cost of production per unit, leading to a decrease in average total cost (ATC), average variable cost (AVC), and marginal cost (MC) of production.

Assume There Is an Improvement in Technology That Increases the Marginal