Scenario 12-17
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 12-17.Average variable cost will be

Question

Quizplus · Accepted Answer

Since the marginal product of labor is decreasing with the addition of each worker, the firm will need to spend more on variable inputs to produce the same amount of output. This means that average variable cost will increase as more workers are hired, leading to a rising curve.

Scenario 12-17 Suppose That a Given Firm Experiences Decreasing Marginal Product of Product