Marginal productivity analysis shows that a drop in the price of the product will cause input use to
A)increase.
B)decrease.
C)stay the same.
D)The information is insufficient to provide an answer.

Question

Quizplus · Accepted Answer

According to the law of diminishing marginal productivity, as the price of the product drops, the marginal productivity of input decreases, which means that using more inputs will lead to a lower output. Therefore, input use will decrease.

Marginal Productivity Analysis Shows That a Drop in the Price