If a Firm's Marginal Product of Labour Is Less Than

question 130

Multiple Choice

If a firm's marginal product of labour is less than its average product of labour, then an increase in the quantity of labour it employs definitely will

• A) decrease its total product.
• B) decrease its average product of labour.
• C) not change its average product of labour.
• D) increase its marginal product of labour.

---

Definitions:

Rational Consumer

An economic theory assumption that consumers make purchasing decisions based on their rational outlook, available information, and self-interest to maximize utility.

Income Effect

A change in the quantity demanded of a product that results from the change in real income (purchasing power) caused by a change in the product’s price.

Normal Good

A good or service whose consumption increases when income increases and falls when income decreases, price remaining constant.

Marginal Utility

Marginal utility is the additional satisfaction or benefit received by consuming one more unit of a good or service, often decreasing as consumption increases.