What will be the behavior of total product when marginal product of variable input is falling but is positive?
Answers
Answer:
When the Marginal Product (MP) increases, the Total Product is also increasing at an increasing rate. This gives the Total product curve a convex shape in the beginning as variable factor inputs increase. ... When the MP declines but remains positive, the Total Product is increasing but at a decreasing rate.
Given the behaviour of marginal product and total product as more and more units of only one input are employed while keeping other inputs as constant.
The behaviour of marginal product and total product as more and more units of only one input are employed while keeping other inputs as constant can be understood with the help of following diagram: [Ref. image]
From the figure, we can analyse that initially as more and more units of one input (say, labour) are employed, the TP curve increases at an increasing rate till point I. After point I, the TP curve rises at a decreasing rate till the point B. The point I is also known as point of inflexion. This is because passing through the point I, the curvature of the TP curve changes from convex to concave. With successive rise in the labour units, the TP curve continues to rise and attains its maximum point B. Beyond this point, the TP curve starts falling when more units of labour are employed. On the other hand, MP initially increases at an increasing rate and attains its maximum point at M (point of inflexion). After point M, MP curve continues to fall and becomes zero at N. Finally. after point N, MP curve continues to fall and becomes negative.