Scenario 13-4
A firm experiences decreasing marginal product of labour with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-4.How will average total cost behave
A)It will always rise.
B)It will always fall.
C)It will be U-shaped, first falling and then rising.
D)It will remain constant.

Question

Quizplus · Accepted Answer

With decreasing marginal product of labour, as the firm adds more workers, the output produced by each additional worker will decrease, leading to a rise in average total cost. Therefore, the answer is A - it will always rise.

Scenario 13-4 a Firm Experiences Decreasing Marginal Product of Labour with the with the Addition