Use the following for questions 37-43.
Exhibit: Total Product

-(Exhibit: Total Product) When hiring units of labor between zero and L₁ units of labor, which of the following statements is true?
A) The marginal product of labor is increasing.
B) The marginal product of labor is decreasing.
C) Total product is increasing at a diminishing rate.
D) None of the above statements is true.

Question

Use the following for questions 37-43.
Exhibit: Total Product
 
-(Exhibit: Total Product) When hiring units of labor between zero and L₁ units of labor, which of the following statements is true?
A) The marginal product of labor is increasing. 
B) The marginal product of labor is decreasing. 
C) Total product is increasing at a diminishing rate. 
D) None of the above statements is true.

Quizplus · Accepted Answer

CWhen hiring units of labor between zero and L₁, the marginal product of labor is increasing, which means each additional unit of labor is adding more to the total output than the previous one. This phase is characterized by increasing returns to labor. Additionally, while the total product is increasing, it does so at a diminishing rate after a certain point, indicating that each additional unit of labor contributes less to the total output than the previous one, reflecting the law of diminishing marginal returns.

Use the Following for Questions 37-43