Suppose that a firm uses a technology for which the MP of a variable factor is initially rising. Then:
A)the firm will never reach diminishing marginal productivity.
B)MP is maximized before AP.
C)MP is maximized when AP is falling.
D)total and AP are maximized when MP is zero.

Question

Quizplus · Accepted Answer

When the MP of a variable factor is initially rising, it means that the additional output produced by an additional unit of that factor is increasing. However, as the firm uses more and more of that factor, the MP will eventually start to decrease due to diminishing marginal productivity. Therefore, the MP will be maximized before the AP reaches its maximum, and the MP will start to fall before the AP starts to fall. Hence, option B is correct.

Suppose That a Firm Uses a Technology for Which the MP