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What is the definition of marginal physical product?
What is the definition of marginal physical product?
- The maximum output achievable from a given level of input
- The total output produced by employing all units of input
- The additional output that can be produced by employing one more unit of input while holding other inputs constant (correct)
- The change in total production when all inputs are varied simultaneously
What does it mean when marginal physical product (MPL) is diminishing?
What does it mean when marginal physical product (MPL) is diminishing?
- MPL remains constant regardless of the units of labor added
- $MPL < 0$ ... By adding the next unit of labor, the increase in total production is negative (correct)
- $MPL_1 < MPL_2$ ... By adding the next unit of labor, the increase in total production is higher than before
- $MPL_1 > MPL_2$ ... By adding the next unit of labor, the increase in total production is lower than before (but TP is still increasing)
What does a diminishing marginal physical product imply?
What does a diminishing marginal physical product imply?
- The average product of capital increases
- The productivity of the variable input decreases as more of it is used (correct)
- The production function is linear
- The marginal cost of production decreases
What does it mean when $MPL_1 > MPL_2$?
What does it mean when $MPL_1 > MPL_2$?
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What does $MPL < 0$ signify?
What does $MPL < 0$ signify?
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