In the short run,if a firm's total product is increasing:
A) its marginal product must be increasing.
B) its marginal product must be positive.
C) its marginal product could be increasing or decreasing.
D) both b. and c. are true.

Question

Quizplus · Accepted Answer

In the short run, if a firm's total product is increasing, it means that the firm is producing more output as it hires more inputs (e.g. workers). The marginal product (MP) measures the additional output that is produced by hiring one more unit of input (usually labor). If the total product is increasing, it means that the marginal product is positive (since the additional input is contributing to more output). However, it is not necessary that the marginal product is increasing as well. The marginal product could be increasing initially but then diminishing as the firm hires more inputs. This is due to the law of diminishing marginal returns, which states that as more and more units of a variable input are added to a fixed input, the marginal product of the variable input will eventually decrease. Therefore, both statement b. (its marginal product must be positive) and c. (its marginal product could be increasing or decreasing) are true.

In the Short Run,if a Firm's Total Product Is Increasing