Use the figure below to answer the following questions. Figure 10.4.1
-Refer to Figure 10.4.1,which illustrates the total product curves for four different plant sizes.One of the fundamental technological facts reflected in the shape of each of the total product curves is the
A)price of the inputs.
B)price of the output.
C)law of diminishing marginal returns.
D)law of economies of scale.
E)fact that capital and labour cannot be substituted for each other.

Question

Use the figure below to answer the following questions.  Figure 10.4.1
-Refer to Figure 10.4.1,which illustrates the total product curves for four different plant sizes.One of the fundamental technological facts reflected in the shape of each of the total product curves is the
A)price of the inputs. 
B)price of the output. 
C)law of diminishing marginal returns. 
D)law of economies of scale. 
E)fact that capital and labour cannot be substituted for each other.

Quizplus · Accepted Answer

The shape of each total product curve reflects the law of diminishing marginal returns, which states that as additional units of a variable input (such as labor) are added to a fixed input (such as capital), the marginal product of the variable input will eventually decline. This explains why the total product curves eventually slope upward at a decreasing rate. Neither the price of inputs nor the price of output is reflected in the shape of the total product curves. The curves do not reflect the law of economies of scale, which pertains to long-run average total cost curves, not total product curves. Finally, the curves do not reflect the substitutability of capital and labor.

Use the Figure Below to Answer the Following Questions