In a certain textile firm, labor is the only short term variable input. The manager notices that the marginal product of labor is the same for each unit of labor, which implies that:
A) the average product of labor is always greater that the marginal product of labor.
B) the average product of labor is always equal to the marginal product of labor.
C) the average product of labor is always less than the marginal product of labor.
D) as more labor is used, the average product of labor falls.
E) there is no unambiguous relationship between labor's marginal and average products.

Question

Quizplus · Accepted Answer

When the marginal product of labor is the same for each unit of labor, it means that the total output is increasing at a constant rate as each unit of labor is added. This also means that the average product of labor is equal to the marginal product of labor. Therefore, choice B is the correct answer.

In a Certain Textile Firm, Labor Is the Only Short