Answer to Question #206402 in Microeconomics for tsion

Question

What is the relation between productivity and cost? Describe the association using equations for MC & MP, and AP & AC

Answer 1

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Productivity is a metric that quantifies labor efficiency in the production of products and services. The cost indicator on the other hand measures the unit labor expenses of producing each unit of output.

When a marginal unit is more costly than the average, the average must rise. By definition, the MC curve crosses the AVC curve at the AVC curve's minimum point. MC and AVC are equal at the junction. 

The AVC and MC curves become APL and MP curves when they are reversed.

When AC is constant MC=AC.