A firm uses labor as an input in production.For the range of output where the average product of labor is increasing:
A)the marginal product of labor must be below the average product of labor.
B)the total product is at a maximum.
C)the marginal cost must also be increasing.
D)the average variable cost must be decreasing.

Question

Quizplus · Accepted Answer

When the average product of labor is increasing, it means that each additional unit of labor is producing more output on average than the units before. This implies that the cost of producing each additional unit (marginal cost) is decreasing, which in turn suggests that the average variable cost, which includes costs like labor, is also decreasing. Choices A, B, and C do not directly relate to the condition where the average product of labor is increasing.

A Firm Uses Labor as an Input in Production