If we think about the additional cost of producing the additional t-shirt,
that additional cost comes from the cost of labor.
From the fact that the only way to make an additional t-shirt,
is to hire an extra worker, but not all workers are the same.
In the beginning the workers actually contribute more, and more.
And then after a while, the contribution of the workers becomes less and less.
So, the cost of the t-shirt, is going to be the mirror image of this.
In the beginning, as we make more t-shirts,
our extra cost of producing the extra t-shirt will actually go down, and
only after a while will this cost start to increase in other words,
if we put quantity, or output, on the horizontal axis,
and we put dollars, or costs, on the vertical axis,
I can go ahead, and graph my marginal cost curve.
Which is the the extra cost of producing the extra unit, and
the typical shape will be, first decreasing and then increasing.
In the beginning it decreases, because each worker
is more productive than the previous worker due to gains from specialization.
After a while, the marginal cost starts to go up because
each worker is less productive than the previous worker,
due to the law of diminishing marginal productivity.