State the behaviour of marginal product when only one input is increased and other inputs are held constant.
Or
Explain what you understand by the "law of diminishing marginal product".
State the behaviour of marginal product when only one input is increased and other inputs are held constant.
Or
Explain what you understand by the "law of diminishing marginal product".
The behaviour of marginal product when only one input is increasingly employed, and others are kept constant, can be explained by the "law of diminishing marginal product". The law states that as we increase the employment of one input keeping others fixed, eventually a point will be attained after which the marginal product of that input will start to fall.
Marginal product (MP) undergoes three phases in the production process, as given below:
1. Phase I: MP increases. This implies that total product increases at an increasing rate in this phase.
2. Phase II: MP decreases but remain positive. In this case, the total product continues to increase but at a decreasing rate.
3. Phase III: MP becomes negative. This is when total product starts to decline.
The behaviour of marginal product when only one input is increasingly employed, and others are kept constant, can be explained by the "law of diminishing marginal product". The law states that as we increase the employment of one input keeping others fixed, eventually a point will be attained after which the marginal product of that input will start to fall.
Marginal product (MP) undergoes three phases in the production process, as given below:
1. Phase I: MP increases. This implies that total product increases at an increasing rate in this phase.
2. Phase II: MP decreases but remain positive. In this case, the total product continues to increase but at a decreasing rate.
3. Phase III: MP becomes negative. This is when total product starts to decline.
