Question

If the marginal product of labor has been rising with each labor unit hired over the...

If the marginal product of labor has been rising with each labor unit hired over the past 30 labor units, then the marginal cost of production has _________ as output rose with these last 30 hired labor units.

a) been falling

b) held constant

c) been rising

Homework Answers

Answer #1

Answer -
Option a) - has been falling is correct.
Explanation -
Marginal cost of production refers to additional cost of production of one additional unit by additional units of factor inputs.
In the given case marginal product of labour has rising with each labour unit over past 30 labour units then the marginal cost of production has been falling with rise in output.As marginal product and marginal cost is inversely related with each other. When marginal product increases ,marginal cost decreseas and vice versa.In the above example also with additional labour units ,marginal product increases so marginal cost has been falling.

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