At Low Levels of Production,marginal Productivity of Labor Increases as Labor

question 22

Essay

At low levels of production,marginal productivity of labor increases as labor increases.At high levels of production,marginal productivity of labor decreases as labor increases.Are these two statements contradictory? Explain.

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Definitions:

Gasoline Prices

The cost per unit of gasoline, determined by various factors including crude oil prices, taxes, supply and demand, and refining costs.

Efficiency

The extent to which resources are used in the best way possible to produce goods and services, minimizing waste and costs.

Shortages

A situation where the demand for a product exceeds its supply at a particular price, often leading to increased prices.

Price Floor

Price floor is a government or regulatory imposed minimum price set above the equilibrium price, preventing the market price from falling below a certain level.