Which of the following explains why the marginal cost curve has a U shape?
A) Initially, the marginal product of labour falls, then rises.
B) Initially, the average product of labour rises, then falls.
C) Initially, the marginal product of labour rises, then falls.
D) Initially, the average cost of production rises, then falls.

Question

Quizplus · Accepted Answer

The U-shape of the marginal cost curve is due to the law of diminishing returns, which means that as more and more units of a variable input, such as labor, are added to a fixed input, such as capital or land, the marginal product of that variable input first rises and then falls. This leads to a corresponding U-shape in the marginal cost curve.

Which of the Following Explains Why the Marginal Cost Curve