You shaped cost curve demonstrate that initially when firm start business with fix capital its cost of production is very high in early stages of production due to less labor applied with fixed capital, because sufficient amount of capital is available for production but optimal labor is not applied with fixed capital so the firm desired output level of production can not be achieved, if firm not apply more labor with such fixed capital its target can not be achieved. So cost of production is very high in early stages of production.
In early sages of production the marginal productivity of capital is positive and this indicate that if firm apply more labor with fixed capital the output per unit of labor increases and the firm gain more out put and its revenue increases. If firm will apply more labor with fixed capital, its total product and total revenue increases. In such production span the marginal productivity of capital and labor both increases with decreasing rate, the fact behind is that, the more labor applied with fixed capital and both the labor and capital operate at full extent.
So the marginal productivity of labor and capital both increases at decreasing rate
Finally the cost of production of firm increases because more labor applied with fix capital, because new labor unable to work with capital because no sufficient capital is available for new labor so contribution of that labor to output is zero, so cost going to increases.
In early sages of production the marginal productivity of capital is positive and this indicate that if firm apply more labor with fixed capital the output per unit of labor increases and the firm gain more out put and its revenue increases. If firm will apply more labor with fixed capital, its total product and total revenue increases. In such production span the marginal productivity of capital and labor both increases with decreasing rate, the fact behind is that, the more labor applied with fixed capital and both the labor and capital operate at full extent.
So the marginal productivity of labor and capital both increases at decreasing rate
Finally the cost of production of firm increases because more labor applied with fix capital, because new labor unable to work with capital because no sufficient capital is available for new labor so contribution of that labor to output is zero, so cost going to increases.
