Scenario 13-8
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-8.Average total cost will be

Question

Quizplus · Accepted Answer

Average total cost is typically U-shaped because initially, as output increases, average total cost decreases due to spreading fixed costs over more units. However, as the firm experiences decreasing marginal product of labor, variable costs increase, causing average total cost to eventually rise.

Scenario 13-8 Suppose That a Given Firm Experiences Decreasing Marginal Product of Product