#### Question

State whether the following statements are *true *or *false*. Give reasons for your answer:

Total product always increases whether there is increasing returns or diminishing returns to a factor.

#### Solution

* True*,

*Total Product (*

*TP*) always increases during the phase of increasing returns or diminishing returns to a factor. However, the difference lies in the rate at which

*TP*rises during the two stages.

*TP*increases at an increasing rate during the stage of increasing returns to factor, whereas, during the stage of decreasing returns,

*TP*increases at a diminishing rate.

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State whether the following statements are true or false. Give reasons for your answer: Total product always increases whether there is increasing returns or diminishing returns to a factor. Concept: Marginal Product.

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