The reason
this happens is because as you add more variable inputs to a given amount of fixed inputs, each
unit of additional inputs helps you less, but still costs the same amount.
Think about the example of a 10 acre farm. The land is a fixed input and we'll say
labor is the only variable input. As you add your first few workers, they do you a lot of good
because they can help you work more efficiently. That means their marginal product is high
(lots more produced for every unit of labor added) and marginal cost is low (because they are
producing a lot their cost is divided over a lot of units of output).
Now
lets say you keep adding laborers. At some point, they just get in each others way. At that
point, the marginal product for each worker is low (they may not even help at all) and the
marginal cost is high (you divide their wages over very little added product).
Does that make sense?
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