When Labor Is the Only Input to the Production Function

question 53

Multiple Choice

When labor is the only input to the production function, why must it be true that when the marginal product of labor is greater than the average product of labor, the average product of labor is increasing and vice versa?

• A)When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a greater marginal product than average, thus raising the average.
• B)When the marginal product of labor is below the average product of labor, an additional unit of labor will produce a greater marginal product than average, thus raising the average.
• C)When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a smaller marginal product than average, thus reducing the average.
• D)When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a zero marginal product.

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Definitions:

Sum of Squares

A statistical measure of the dispersion of observation values, calculated as the sum of the squared differences from the mean.

Regression Coefficient

A value that represents the degree of change of a dependent variable expected from a one-unit change in an independent variable, all else being equal.

Simple Linear Regression

A statistical technique that fits a linear equation to observed data to model the connection between a dependent variable and a single independent variable.

t-test Statistic

A test statistic used to determine if there is a significant difference between the means of two groups.