Introduction to Economics 1 Deneme Sınavı Sorusu #723845

When the wage rate is considered, which of the followings occurs as the average product of labor (APL) increases?


The average variable cost increases

The average variable cost stays the same

The average variable cost decreases

The marginal cost continues to fall as long as the average variable cost remains below it

Marginal cost decreases


Yanıt Açıklaması:

Given the wage rate, a higher average product of labor (APL) implies a lower average variable cost (AVC) and vice versa. So, as APL increases, AVC decreases and hits its minimum when APL is at its maximum. Once APL starts to fall, AVC begins to rise and generate a U shape. Therefore, the correct option is C. 

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