Chapter 7: Problem 34
What is the relationship between marginal product and marginal cost? (Hint: Look at the curves.) Why do you suppose that is? Is this relationship the same in the long run as in the short run?
Short Answer
Expert verified
The relationship between marginal product (MP) and marginal cost (MC) is an inverse one, driven primarily by the law of diminishing returns in the short run. When the MP curve is rising, the MC curve falls, and vice versa. In the long run, the inverse relationship remains, but it is less pronounced due to the flexibility in adjusting all factors of production, which reduces the effects of diminishing returns.