Question

Scenario 13-20 suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level. refer to scenario 13-20. average total cost will be

Answer 1

Answer:

U-shaped

Explanation:

Since the marginal product of labor is decreasing, the average variable costs and marginal costs will be increasing at all points, but the average fixed costs will be decreasing. That is why the average total costs (which includes both variable and fixed costs per unit) will be U-shaped since they will fall at the beginning when the decrease in marginal product of labor is small, bu then will increase as the marginal product of labor falls even more.