Consider the following information about baseball production at Bobby's Baseball Factory: $$\begin{array} { | c | c | }
\hline \text { Worker } & \text { Marginal Product } \
\hline 1 & 3 \
\hline 2 & 5 \
\hline 3 & 8 \
\hline 4 & 10 \
\hline 5 & 7 \
\hline 6 & 4 \
\hline 7 & 2 \
\hline
\end{array}$$ Bobby pays all his workers the same wage,and labor is his only variable cost.From this information we can conclude that Bobby's average variable cost decreases

Question

Consider the following information about baseball production at Bobby's Baseball Factory: $$\begin{array} { | c | c | } 
\hline \text { Worker } & \text { Marginal Product } \
\hline 1 & 3 \
\hline 2 & 5 \
\hline 3 & 8 \
\hline 4 & 10 \
\hline 5 & 7 \
\hline 6 & 4 \
\hline 7 & 2 \
\hline
\end{array}$$ Bobby pays all his workers the same wage,and labor is his only variable cost.From this information we can conclude that Bobby's average variable cost decreases

Quizplus · Accepted Answer

The average variable cost decreases as long as the marginal product of labor is increasing. It increases until the 4th worker, producing a total output of 26. After that, the marginal product decreases, leading to an increase in average variable cost.

Consider the Following Information About Baseball Production at Bobby's Baseball