When labor is the only variable input used in production,marginal cost [MC]: A)is inversely related to the marginal product of labor [MP_L]. B)is inversely related to the wage rate [w]. C)is positively related to MP_L. D)is negatively related to labor supply [S_L].

Question

Quizplus · Accepted Answer

Marginal cost (MC) is inversely related to the marginal product of labor (MP_L) when labor is the only variable input in production. This means that as the marginal product of labor increases, the marginal cost of producing an additional unit of output decreases. This relationship can be explained by the fact that as more labor is added, productivity increases up to a certain point, after which diminishing returns set in and productivity starts to decline. As a result, the additional cost of producing an extra unit of output increases, leading to a higher marginal cost.

When Labor Is the Only Variable Input Used in Production,marginal