What happens when the marginal product of labour rises?
A)the marginal cost of production will exceed the average total cost.
B)the marginal cost of production also rises.
C)the marginal cost of production falls.
D)the average total cost of production also rises.

Question

Quizplus · Accepted Answer

When the marginal product of labour rises, it means that each additional unit of labour is producing more output than the previous unit. This leads to a decrease in the marginal cost of production, as the cost of producing each additional unit of output is decreasing. This also has an effect on the average total cost, which will also fall due to the increase in productivity. Therefore, the correct choice is C, which states that the marginal cost of production falls.

What Happens When the Marginal Product of Labour Rises