Which of the following holds true?
A)When the Marginal Product (MP)is rising,Marginal cost (MC)is rising; and when MP is falling,MC is falling.
B)When MP is rising,MC is falling,and when MP is falling,MC is rising.
C)When MP is rising,MC is constant,and when MP is falling,MC is negative.
D)There is no relationship between MP and MC.

Question

Quizplus · Accepted Answer

When the marginal product is rising, it means that for each additional unit of input, the output is increasing at a faster rate. This leads to a decrease in the marginal cost, which is the cost of producing one additional unit of output. On the other hand, when the marginal product starts falling, it means that the output is increasing at a slower rate for each additional input, leading to an increase in the marginal cost. Therefore, when MP is rising, MC is falling, and when MP is falling, MC is rising.

Which of the Following Holds True