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1. The below question shows Short-Run productivity data for a small busin Units of Labor Total Product Marginal Product Avera

c. What happens to Marginal Cost when Marginal Product is rising? When Marginal Product is falling? When Marginal Product is

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1(b). Answer: Marginal product first rises because the fixed capital gets used more poductively as added workers are employed. Each added worker contributes more to output then the previous worker because the firm is better able to use its fixed plant ans equipments.As still more labor is added,the law of diminishing returns take hold. Therefore, the marginal product first rises ,then declines and ultimately becomes negative.

(c) Answer : When Marginal product is rising then marginal cost is declining and when marginal product is falling marginal cost is rising.

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