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Task 1 What is the relationship between the marginal product of labour and the marginal cost?...

Task 1

What is the relationship between the marginal product of labour and the marginal cost?

relate your answer to diminishing marginal product of labor.

use your own word and detailed explaination

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Answer #1

Marginal product refers to change in total product when one or more units of the variable factor like labour is used whereas marginal cost refers to change in total cost when an additional unit of output is produced. MC is only variable cost. It doesn’t include fixed cost due to which summation of mc is tvc. Mp and mc are inversely related. As in law of variable proportions, as more and more units of variable factors are used with the fixed factor, firstly mp increases and mc decreases then mp falls and mc rises due to which shape of mp is inverted u and mc is u shaped.

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