Suppose that a firm's capital is fixed and one more unit of labour is hired,thereby increasing the firm's total output.Which of the following statements can be correct? 1.Marginal cost would remain constant.
2.Marginal cost would increase.
3.Marginal cost would decrease.
A)1 only
B)2 only
C)3 only
D)Any of 1,2,and 3 is possible.
E)None are possible.

Question

Quizplus · Accepted Answer

The marginal cost depends on the change in total output and the cost of hiring additional labor. It can remain constant, increase, or decrease depending on the productivity of the additional labor and the cost structure of the firm.

Suppose That a Firm's Capital Is Fixed and One More