The total physical product increases initially at an increasing rate, and then, because of the law of diminishing returns, at a decreasing rate.

Question

Quizplus · Accepted Answer

Initially, as more inputs are used, the total physical product increases at an increasing rate due to efficiencies gained from specialization and better utilization of resources. However, after a certain point, the law of diminishing returns sets in, meaning that adding more of one input (while keeping others constant) leads to smaller increases in output, thus increasing at a decreasing rate.

The Total Physical Product Increases Initially at an Increasing Rate