A Negative Value for the Marginal Physical Product Would Indicate

question 366

Multiple Choice

A negative value for the marginal physical product would indicate that

• A) the company has not yet reached the point of saturation.
• B) total output increased by a significant amount.
• C) total output decreased when the extra unit of the variable input was added.
• D) total output increased, but the increase was very small.

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Definitions:

Output

The total amount of goods and services produced by an economy or a production process.

AFC

Average Fixed Cost (AFC) is the fixed costs of production (such as rent, salaries, machinery) divided by the quantity of output produced.

Fixed Costs

Costs that remain constant regardless of the level of production or output, such as rent, salaries, and loan repayments.

Maximum Amounts

The highest allowable or possible quantity or number in a given set of circumstances or regulations.