. ) lf the marginal product of labor falls whenever more labor is used , and lab

Question

. ) lf the marginal product of labor falls whenever more labor is used , and labor is the only factor of duction used by the firm, than at every output level the firm's short-run average variable cost exceeds marginal cost. II. If labor obeys the law of diminishing returns, and is the only factor of production used by the firm, then at every output level short-run average variable costs exceed marginal costs. AVC7MO I is true, and II is false. B) I is false, and II is true. C) I and II are both true. D) I and II are both false. Answer: A

Explanation / Answer

answer is option C because as Marginal product of labor decrease each additional labor adds more to AVC than to MC i.e AVC is above MC.

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