Question

Which stage is present when TP rises, but each new worker adds less output than the previous worker?

Options

• TP rises at an increasing rate

• TP rises at a diminishing rate

• TP is maximum

• TP falls

Answer 1

TP rises at a diminishing rate

Explanation:

Here, MP is positive but falling, so TP continues to rise, but more slowly, as fixed resources start limiting productivity.