Figure 12-1
-Refer to Figure 12-1.Suppose the production function shifts from TP2 to TP1.Such a shift in the total product curve is most likely due to a decrease in the firm's
A) costs of production.
B) product price.
C) market share.
D) productivity.

Question

Figure 12-1 
-Refer to Figure 12-1.Suppose the production function shifts from TP2 to TP1.Such a shift in the total product curve is most likely due to a decrease in the firm's
A) costs of production. 
B) product price. 
C) market share. 
D) productivity.

Quizplus · Accepted Answer

The shift in the total product (TP) curve from TP2 to TP1 indicates a decrease in output for every level of input, which implies a decrease in productivity. A shift in the TP curve due to a decrease in costs of production would result in an upward shift in both TP1 and TP2. A shift in the TP curve due to a decrease in product price would result in a leftward shift in the TP curve, but not necessarily a decrease in output at every level of input. A shift in the TP curve due to a decrease in market share is unlikely, as market share does not directly impact the production process.

Figure 12-1 -Refer to Figure 12-1.Suppose the Production Function Shifts from TP2