If labor is a firm's only variable input,marginal cost ultimately depends on _____
A)the fixed cost of labor.
B)how much profit is made.
C)the price of the good produced.
D)how much output each worker produces.
E)the fixed cost per unit.

Question

Quizplus · Accepted Answer

Marginal cost is the additional cost of producing one more unit of output. Since labor is the only variable input, marginal cost ultimately depends on how much output each worker produces. As the output initially increases with each additional unit of labor, marginal cost decreases, but eventually, as output increases at a decreasing rate, marginal cost increases.

If Labor Is a Firm's Only Variable Input,marginal Cost Ultimately