Which of the following statements is true?
A)If the marginal product of labor diminishes, the average fixed cost rises.
B)If the marginal product of labor diminishes, the average variable cost is constant.
C)If the marginal product of labor diminishes, the marginal cost falls.
D)If the marginal product of labor diminishes, the average total cost rises.
E)If the marginal product of labor diminishes, the total cost rises at a diminishing rate.

Question

Quizplus · Accepted Answer

The diminishing marginal product of labor implies that each additional unit of labor contributes less to output than the previous one. This does not directly affect average fixed costs, average variable costs, or marginal costs in the ways described in options A, B, and C. However, it does mean that total costs increase as more labor is added, but each additional unit of labor adds less to total costs than the previous one, leading to a diminishing rate of increase in total costs, as stated in option E.

Which of the Following Statements Is True