After Suzie, owner of Suzie's Sweet Shop, hires her 8th worker, the average product of labour declines.Which of the following statements must be true?

Question

Quizplus · Accepted Answer

If the average product of labour declines after the 8th worker is hired, it means the marginal product of the 8th worker is less than the average product of labour before the 8th worker was hired. Therefore, statement B must be true. Statement A is not necessarily true as the marginal product of the 8th worker could still be positive, but lower than the average product. Statement C is not necessarily true as Suzie may still benefit from economies of scale by hiring more workers, even if the average product of labour declines. Statement D is impossible as the average product of labour cannot be negative.

After Suzie, Owner of Suzie's Sweet Shop, Hires Her 8th