Answer to Question #48528 in Microeconomics for Yoyo

Question

Suppose the total product (output) of a firm changes from 100 to 150 to 180 as the firm changes from 10 to 11 to 12 workers. If it must pay all workers the same wage, the firm experiences increasing marginal cost over this range of output. Explain why the statement is True, False, or Uncertain according to economic principles.

Answer 1

Marginal cost of production 50 units (from 100 to 150) is 1 worker = 1/50
Marginal cost of production 30 units (from 150 to 180) is 1 worker = 1/30
Marginal costs increase over the range of output