If the slope of the total product curve is decreasing, the slope of the total variable cost curve is:
A) increasing.
B) decreasing.
C) unchanged.
D) at its minimum value.

Question

Quizplus · Accepted Answer

When the slope of the total product curve is decreasing, it means that the marginal product of labor is declining. This typically occurs when the amount of labor input increases beyond a certain point, at which point additional labor brings diminishing returns. If the marginal product of labor is declining, this means that the additional output gained from each additional unit of labor is decreasing. As a result, the firm needs to hire more units of labor to produce the same amount of output as before. This means that the total variable cost curve is increasing, because the firm is incurring additional costs to hire more units of labor. Therefore, the slope of the total variable cost curve is increasing.

If the Slope of the Total Product Curve Is Decreasing