Use the following figure to answer the questions : Figure 7-1 shows the total product curve for different levels of a variable input,labor.

-Refer to Figure 7-1.A firm would choose to operate between points C and D because:
A)marginal product has already reached a maximum.
B)average product is rising over that range.
C)marginal product and average product are positive,but falling.
D)marginal product and average product are rising.

Question

Use the following figure to answer the questions : Figure 7-1 shows the total product curve for different levels of a variable input,labor.

-Refer to Figure 7-1.A firm would choose to operate between points C and D because:
A)marginal product has already reached a maximum. 
B)average product is rising over that range. 
C)marginal product and average product are positive,but falling. 
D)marginal product and average product are rising.

Quizplus · Accepted Answer

Operating beyond point D would result in decreasing marginal and average product, which would lead to lower profitability. Therefore, the firm would choose to operate between points C and D where both marginal and average product are positive, but falling.

Use the Following Figure to Answer the Questions : Figure