If two firms are identical in all respects except that one has more capital than another, the marginal product curve for the firm with more capital:
A)must equal the marginal product curve for the firm with less capital.
B)will lie above the marginal product curve for the firm with less capital.
C)will lie below the total marginal curve for the firm with less capital.
D)will show no diminishing marginal returns.

Question

Quizplus · Accepted Answer

The marginal product curve for the firm with more capital will lie above the marginal product curve for the firm with less capital because with more capital, the firm is able to produce more output with each additional unit of input. This means they will experience higher marginal returns and therefore have a higher marginal product curve.

If Two Firms Are Identical in All Respects Except That