Final answer:
The relationship between marginal product and marginal cost is inverse. It impacts production decisions in terms of cost and output levels. This relationship holds true in both the short run and long run, although the flexibility of factors of production may lead to different levels of marginal product and marginal cost in the long run.
Step-by-step explanation:
The relationship between marginal product and marginal cost is an inverse one. As the marginal product of a factor of production increases, the marginal cost decreases, and vice versa. This is because as more units of a factor of production are added, the additional output produced per unit of the factor diminishes, resulting in higher marginal costs.
This relationship is applicable in both the short run and the long run. However, in the long run, factors of production are more flexible and can be adjusted, which may lead to changes in the levels of marginal product and marginal cost compared to the short run.