Explain the relationship between marginal product and average product
What will be an ideal response?
As the quantity of labor initially increases the firm experiences increasing marginal returns and the marginal product of labor increases. The marginal product of labor is greater than the average product over this range of labor, so the average product of labor increases when the quantity of labor increases. Eventually, diminishing marginal returns causes the marginal product of labor to fall. When the marginal product of labor falls below the average product, the average product decreases as the quantity of labor increases.
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If demand for a product is perfectly inelastic, a change in price will not change total revenue
Indicate whether the statement is true or false
An income tax provides an incentive to _____
a. work for large companies b. increase investment c. substitute away from being self-employed d. consume more and save less
Economists use theories to: a. abstract from the complexities of the world. b. understand economic behavior
c. explain and help predict human behavior. d. do all of the above.
A . Explain why government payments to farmers are larger under a target price system than under the parity price system. b. Explain how the government can qualify a target price program to moderate the size of its deficiency payments