Refer to the Above Diagram.At Output Level Q

question 106

Multiple Choice

Refer to the above diagram.At output level Q:

• A) marginal product is falling.
• B) marginal product is rising.
• C) marginal product is negative.
• D) one cannot determine whether marginal product is falling or rising.

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Definitions:

Returns to Scale

The rate at which output increases as inputs are proportionally increased, indicating either increasing, constant, or decreasing efficiency in production.

Long-Run Average Cost

The average cost per unit of output when all inputs, including capital, are variable, allowing for the adjustment of all factors in production to achieve the lowest cost.

Output

The quantity of goods or services produced in a given period of time.

Returns to Scale

The change in output resulting from a proportionate increase in all inputs (factors of production), where increasing, constant, and decreasing returns to scale can occur.