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The marginal product curve is 'n' shaped because of the law of diminishing returns. As you add more units of a variable factor, at first, the marginal product rises, (this is because the fixed factor is under-utilised, so adding more units of the variable factor will increase the output from each additional unit). But after a certain point, the marginal product begins to fall, as the fixed factor input becomes diluted amongst workers and so you get less from each additional unit of the variable factor.
For an example, re-read the above paragraph and replace the word variable factor with labour and fixed factor with capital.
The marginal cost curve is the inverse of the marginal product curve - hence it is shaped like a 'u' or a 'Nike tick'. This is because if your marginal product is high - then your marginal costs are low. For example, if a firm must pay electricity for the time it takes to produce a unit, if the firm can produce the unit quicker (i.e. has a high marginal product) then the cost of electricity will be lower. Hence the inverse relationship between marginal cost and marginal product.
What else can I help you with?
What is the relationship between marginal physical product MPP and marginal cost MC Provide an examples?
what is the relationship between marginal physical product and marginal cos
How does the law of diminishing marginal productivity affect the cost of productions?
When marginal productivity is diminished, the cost of productions can decrease if the marginal costs for making an extra product is larger than the marginal revenue for that 1 extra unit product.
Relationship between marginal cost and average total cost?
The cost curves best tells us the relationship between the marginal cost and average total cost. The average fixed cost (AFC) curve will decline as additional units are produced, and continue to decline.
What is the relationship between marginal cost and marginal revenue in determining optimal production levels?
The relationship between marginal cost and marginal revenue in determining optimal production levels is that a company should produce at a level where marginal cost equals marginal revenue. This is because at this point, the company maximizes its profits by balancing the additional cost of producing one more unit with the additional revenue generated from selling that unit.
What is the relationship between marginal revenue and marginal cost in determining the optimal level of production for a firm?
The relationship between marginal revenue and marginal cost in determining the optimal level of production for a firm is that the firm should produce at a level where marginal revenue equals marginal cost. This is because at this point, the firm maximizes its profits by balancing the additional revenue gained from producing one more unit with the additional cost of producing that unit.
How does the relationship between marginal cost and marginal benefit impact producer?
It helps producers decide how much of a good to make.
How does the relationship between marginal cost and marginal benefit impact producers?
It helps producers decide how much of a good to make.
What is the relationship between Average variable cost Average fixed cost and marginal cost?
we can subtract the AVC and we will get the MC
What is the relationship between constant marginal cost and the overall cost structure of a business?
The relationship between constant marginal cost and the overall cost structure of a business is that when the marginal cost remains constant, it means that the cost of producing each additional unit of output does not change. This can lead to a more predictable and stable overall cost structure for the business, making it easier to plan and manage expenses.
What Relation between marginal cost and average cost?
relation ship between average cost and marginal cost
What is the relationship between marginal cost and total cost in the production process?
Marginal cost is the additional cost incurred by producing one more unit of a good or service. It is calculated by dividing the change in total cost by the change in quantity produced. Total cost, on the other hand, is the sum of all costs incurred in producing a certain quantity of goods or services. The relationship between marginal cost and total cost is that marginal cost affects the total cost by showing how much the cost increases when producing additional units. When marginal cost is less than average total cost, total cost decreases. When marginal cost is greater than average total cost, total cost increases.
What is the differences between standard cost and marginal cost?
The main difference between standard cost and marginal cost is that in standard cost a target is set and in marginal cost there is no target set. Marginal cost is the change of the total cost due to the quantity produced.
