What should be the answer?
Answers
A rational producer will produce at the point where Marginal Product(MP) is zero.Hence,the correct answer is option d) or MP is zero
Explanation:
In Production Economics,at the initial stage of production phase,the firm or manufacturer experiences increasing returns to scale implying that as the output expands,the MP is greater than the Average Product(AP) and consequently,AP will increase.Therefore,at this stage the firm or the company can take advantage of the the increasing AP or output productivity and still continue production.Now,due to law of diminishing marginal product of the factor/inputs,MP will increase but at a decreasing rate and at one stage in production,it will be equal to 0 or will not increase anymore.At this stage,the total output productivity is also maximized as beyond this point,MP will start to fall.Now,if the firm or the manufacturer continues to produce beyond this point,it will experience negative MP or in other words,MP will start to fall and become less than AP and hence,AP will also start decreasing indicating falling output productivity.This phase is characterized as the decreasing returns to scale.Therefore,the firm or manufacturer will stop producing at the stage where MP is equal to 0 or the total or overall output productivity is maximized.Beyond this point,the firm will experience diminishing returns to scale and will eventually reach negative returns to scale if it continues production.
Answer:
hii buddy .....here's ur answer...
Explanation:
ur answer is option d...
MP is equal to zero