If a firm's production process fits the standard stylization, as its scale increases, its marginal and average output:
A)increase, then decrease, then are constant.
B)decrease, then are constant, then increase.
C)are constant, then increase, then decrease.
D)increase, then are constant, then decrease.

Question

Quizplus · Accepted Answer

According to the standard stylization of a production process, as the scale of production increases, the marginal product of labor initially increases due to specialization and division of labor, reaches a maximum at some point, and then decreases due to diminishing returns. However, the average product of labor initially increases as well, due to the increased efficiency of the production process, and then reaches a maximum at some point before decreasing as well due to diminishing returns. Therefore, the correct answer is that the marginal output increases, is constant at some point, and then decreases, while the average output increases, reaches a maximum, and then decreases as well.

If a Firm's Production Process Fits the Standard Stylization, as Its