Which of the following determines the shape of the marginal cost curve in the short run?
A)The marginal product of labor is first increasing and then decreasing
B)The wage rate first decreases and then increases throughout the range of output
C)The price of output produced by labor is first decreasing and then increasing
D)The presence of economies of scale in the product market

Question

Quizplus · Accepted Answer

The shape of the marginal cost curve in the short run is determined by the law of diminishing returns. When marginal product of labor increases initially and then starts to decline, marginal cost first decreases and then starts to increase. This is because when marginal product is increasing, each additional unit of output is produced at a lower cost than the previous unit, leading to a decrease in marginal cost. However, when marginal product starts to decrease, each additional unit of output requires more inputs, leading to an increase in marginal cost.

Which of the Following Determines the Shape of the Marginal