Explain why the marginal cost of production must increase if the marginal product of a variable resource is decreasing
What will be an ideal response?
Consider a variable input such as labor. If the marginal product of labor is decreasing it means that the output produced by each additional unit of labor hired is smaller than previous units of labor. If all workers are paid the same wage, the marginal cost of additional output each worker produces depends on the worker's marginal product. If the marginal product falls then the marginal cost of that additional output must rise.
You might also like to view...
Refer to Table 13-2. What is Eco Energy's profit?
A) $125 B) $140 C) $145 D) $150
Charging different prices to different consumers for the same product when the price differences are not due to differences in cost is called arbitrage
Indicate whether the statement is true or false
In the long run, imports are paid for by
A) investment. B) exports. C) dollars. D) gold or other universally accepted monies.
Related to the Economics in Practice on p. 673: Protectionism of the kind that is suggested in the petition of the candle makers would most likely result in
A. lower production cost. B. lower consumption. C. more efficient production. D. lower prices.