3. Assume that labor is the only variable input. If a firm's short-run marginal cost is increasing as output rises, which of the following must be true? (A) Average product of labor is constant. (B) Marginal product of labor is decreasing. (C) Average product of labor is increasing. (D) Total product of labor is decreasing.
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We know that short-run marginal cost is increasing as output rises. This means that the cost of producing an additional unit of output is increasing. Show more…
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