If the marginal production of labor is falling, is the marginal cost of production rising or falling? Briefly explain.

Marginal Product of Labour falling, Marginal Cost of Production rising.

Explanation:

Theory of Variable Proportions / Diminishing Marginal Productivity states : As more variable inputs are employed on a fixed factor, 3 phases - 1. Total product (TP) increases at increasing rate & Marginal Product Increases, (inflexion - TP max, MP 0), 2. TP increases at decreasing rate & MP decreases, 3. TP falles & MP negative.

This happens because: 1. Initially when Variable Factors are employed on fixed factor - fixed factor is better utilised, variable factor efficiency increases. 2. Then - specialisation, division of labour lets attain optimum factors combination & variable factor thereafter becomes imperfect substitute for lacking fixed factor. 3. At last, more variable factor employment makes fixed factor over crowded & creates pressure on it.

This variable factor productivity affects cost : 1. TP increasing at increasing rate, MP increases - TC increases at diminishing rate, MP falls. Afterwards TP increasing at diminishing rate, MP falling - TC increases at inceasing rate, MC increases