If we graph the average product of labor as a function of the quantity of capital employed by a firm operating along its production function.When the capital per worker increases,the average product of labor curve is

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Quizplus · Accepted Answer

According to the law of diminishing marginal returns, when the quantity of capital increases, the marginal product of labor will eventually decrease. However, the average product of labor can still increase if the decrease in marginal product is not as much as the increase in capital per worker. Therefore, the average product of labor curve will be upward sloping.

If We Graph the Average Product of Labor as a Function