Question

When total product is increasing at a decreasing rate, marginal product is:

A. positive and increasing.
B. positive and decreasing.
C. constant.
D. negative.

Answer 1

When total product is increasing at a decreasing rate, the marginal product is positive and decreasing.

Step-by-step explanation:

When total product is increasing at a decreasing rate, the marginal product is positive and decreasing (B). This means that the additional output gained from each additional unit of input (e.g. labor or capital) is positive but diminishing. For example, if the total product increases from 0 to 10 when one unit of input is added, and then increases from 10 to 15 when another unit is added, the marginal product for the second unit is 5 (15 - 10). It is positive, but lower than the marginal product for the first unit of input.