The table above shows the total product schedule for The X Firm. Decreasing marg

Question

The table above shows the total product schedule for The X Firm. Decreasing marginal returns occur with the worker because 6th; output starts to decline 6th; the marginal product of labor is greater than the average product of labor 5th; the marginal product of labor for the 5th worker is less than the marginal product of the 4th worker 4th; output reaches is maximum 5th; the average product of labor is also declining The figure above shows a firm's total product curve. Which of the points show efficient production points? Select one: all points on the TP curve all the points above and on the TP curve all points above the TP curve d. aII the darkened points below the TP curve e. all the darkened points below and on the TP curve

Explanation / Answer

1.

MP = change in total product/change in quantity.

AP = total product/quantity.

The correct answer is option E.

When the MP falls, it pulls down the AP and AP also starts declining.

2. Option A is correct.

All the points on the TP curve represents the efficient points in production. Points above the TP are unattainable, points below are inefficient.

quantity TP MP AP 0 0 nil nil 1 2 2 2 2 5 3 2.5 3 9 4 3 4 15 6 3.75 5 18 3 3.6 6 17 -1 2.83

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