If a production technology has diminishing marginal product of all inputs throughout, then the producer choice set is convex.

Question

Quizplus · Accepted Answer

A diminishing marginal product of all inputs implies that as more of an input is used, the additional output gained from an extra unit of input decreases. This characteristic does not guarantee that the producer's choice set is convex. Convexity of the choice set depends on the ability to combine inputs in different proportions to produce outputs, not directly on the marginal productivity of inputs.

If a Production Technology Has Diminishing Marginal Product of All