Question

Giving reasons state the following statements whether true or false:-

(i) When there are diminishing returns to a factor total product always decreases

(ii) Total product will increase only when marginal product increases

(iii) Increase in total product always indicate that there are increasing reaturns to a factor

(iv) When there are diminishing returns to a factor, both always falls.

Answer 1

i. False as during diminishing returns to a factor, the TP increases but at a decreasing rate and attains its maximum.
ii. False. ​Total product will also increase when marginal product decreases.
iii. False. It is not necessary that increase in total product always indicate that there are increasing returns to a factor as in the stage of dimnishing returns to factor total product also increases but at dimnishing rate.
iv. False. ​When there are diminishing returns to a factor, total product increases and marginal product falls.