From Equation (7.1) in the book, the short-run marginal cost of production is MC = w/MP_L. Based on this equation, which of the following statements is NOT true? A) If the marginal product of labor is constant, then MC is constant. B) If the marginal product of labor is a concave curve, then the MC curve is also concave. C) If the marginal product of labor is a concave curve, then the MC curve is U-shaped. D) MC increases as the marginal product of labor declines.

Question

Quizplus · Accepted Answer

The marginal cost (MC) is inversely related to the marginal product of labor (MPL). If MPL is constant, MC is constant (A is true). If MPL declines, MC increases (D is true). If MPL is concave, meaning it decreases at a decreasing rate, MC would not be concave but convex or could be U-shaped depending on the specific shape of the MPL curve, making (C) potentially true and (B) false.