After Suzie, owner of Suzie's Sweet Shop, hires her 8th worker the average product of labor declines.Which of the following statements must be true?

Question

Quizplus · Accepted Answer

The statement implies that adding the 8th worker decreased the average product of labor. This can only happen if the marginal product of the 8th worker is less than the previous average product of labor. Therefore, option B must be true. Option A is not necessarily true because the marginal product could be positive but simply lower than the previous average. Option C is not necessarily true because the decrease in average product does not automatically mean a decrease in profits. Option D is impossible because the average product of labor cannot be negative.

After Suzie, Owner of Suzie's Sweet Shop, Hires Her 8th