Marginal Product and Marginal Cost Review

The video explains why the marginal cost curve is U-shaped, focusing on the law of diminishing marginal returns. It discusses how marginal cost decreases as marginal product increases due to specialization, and increases when marginal product decreases. A numerical example is provided to illustrate these concepts, showing how changes in labor affect total and marginal costs.

What shape does the marginal cost curve typically have?

• Linear

• V-shaped

• U-shaped

• Circular

What happens to marginal cost when marginal product is increasing?

• Marginal cost increases

• Marginal cost remains constant

• Marginal cost decreases

• Marginal cost becomes zero

Why does the marginal product initially increase with more workers?

• Due to increased wages

• Because of specialization

• Because of higher fixed costs

• Due to reduced resources

In the numerical example, what is the marginal cost when the output increases from 5 to 15 units?

• $2

• $1

• $10

• $5

What is the marginal cost when the output increases by only 1 unit?

• $2

• $1

• $5

• $10