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State the behaviour of marginal product when only one input is increased and other inputs are hold constant.
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Solution
When only one input is increased and other inputs are hold constant, the MP will be
Units of Variable Factor | TP | MP | Change in the MP Curve |
0 | 0 | MP curve increases at an increasing rate till 3rd unit | |
1 | 4 | 4 | |
2 | 12 | 8 | |
3 | 24 | 12 | |
4 | 32 | 8 | MP curve continues to fall from 5th unit |
5 | 34 | 2 | |
6 | 30 | -4 | MP curve continues to fall and it becomes negative from 6th unit |
Concept: Marginal Product
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