Question
Asked Jan 30, 2020
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A firm’s marginal product will be at a maximum at which of the following levels of output?
 
A
less than the quantity where average cost is a minimum.
 
B
greater than the quantity where marginal cost is a minimum.
 
C
greater than the quantity where average cost is a minimum.
 
D
less than the quantity where marginal cost is a minimum.
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Expert Answer

Step 1

To determine the level of output at which a firm's marginal product will be at a maximum.

Step 2

The marginal product is the additional quantity produced when one more worker is hired. Average product is the average number of units produced by the workers. Marginal cost is the additional cost incurred when an additional unit of output is produced. The average cost is the per unit cost of production which can be calculated by dividing the total cost by the output produced.

Step 3

The relationship between the marginal product, average product, marginal cost and the average cost is shown below:

Economics homework question answer, step 3, image 1

The marginal cost curve is just thye mirror image of the marginal product curve. When the average product curve intersects the marginal product curve then the average cost is minimum and the average product curve cuts the marginal product curve when the marginal pr...

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