Figure 11-8
-Refer to Figure 11-8.Assume that production isoquants are convex.Total cost and output produced must increase for each of the following movements except one.Which movement is the exception?

Question

Figure 11-8 
-Refer to Figure 11-8.Assume that production isoquants are convex.Total cost and output produced must increase for each of the following movements except one.Which movement is the exception?

Quizplus · Accepted Answer

If production isoquants are convex, then the law of diminishing returns applies, which means that as more and more units of a variable input are added to a fixed input, the marginal product of the variable input will eventually decrease. Thus, if we move from point b to point c, we are adding more of the variable input (labor) while holding capital fixed. As a result, the marginal product of labor will eventually decrease, causing the total costs to increase for each unit of output produced. Therefore, the only movement that doesn't make sense is the movement from point b to point c.

Figure 11-8 -Refer to Figure 11-8.Assume That Production Isoquants Are Convex.Total Cost