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Consider the Following Two Scenarios

Question 62

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Consider the following two scenarios:
i)The marginal product of a worker in a firm is 10 units.When an additional worker is employed,his marginal product is less than 10 units.
ii)The average total cost of a firm producing 10 units of output is $200.When it produces an additional unit,the average total cost increases to $300.
a)What is the difference between these scenarios?
b)What could be the reason behind both phenomena occurring?
c)Does specialization explain either of the two scenarios?

Correct Answer:

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a)The first scenario represents diminish...

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