Scenario 12-17
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 12-17.Average fixed cost will be
A) rising at all points.
B) falling at all points.
C) U-shaped.
D) constant.

Question

Quizplus · Accepted Answer

Average fixed cost (AFC) falls as output increases because fixed costs are spread over a larger number of units, regardless of the marginal product of labor.

Scenario 12-17 Suppose That a Given Firm Experiences Decreasing Marginal Product of Product