When a firm's total- product curve is increasing at a decreasing rate
A) the marginal- product curve lies below the average- product curve.
B) average product is falling.
C) marginal product is positive but declining.
D) marginal product is negative and decreasing.
E) average product is zero.

Question

Quizplus · Accepted Answer

When the total-product curve is increasing at a decreasing rate, it means that the marginal product is positive but declining. This happens when additional units of input add less and less to total output, indicating that the law of diminishing returns has set in. Hence, option C is correct. Option A is incorrect because the marginal product curve lies above the average product curve till the point where the average product curve reaches its peak. Option B is incorrect because average product may still be rising while the total-product curve is increasing at a decreasing rate. Option D is incorrect because marginal product is positive. Option E is incorrect because the average product is not zero.

When a Firm's Total- Product Curve Is Increasing at a Decreasing