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When the marginal product of an input declines as the quantity of that input increases, the production function exhibits a. increasing marginal product. b. diminishing marginal product. c. diminishing total product. d. Both b and c are correct.

Ask by Boone Grant. in the United States
Mar 16,2025

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When the marginal product of an input decreases as more of it is used, the production function shows diminishing marginal product.

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The correct answer is b: diminishing marginal product. This concept is essential in economics, illustrating that as you continue to add more of a single input (like labor or raw materials) to the production process, each additional unit contributes less and less to the overall output. It’s a key reason why businesses often seek to optimize their input levels. In real-world applications, companies encounter diminishing marginal returns regularly. For instance, imagine a bakery. At first, adding bakers increases output significantly, but as more bakers cram into the kitchen, the space becomes cramped, and the benefit of each additional baker diminishes. This principle helps businesses strategize on resource allocation and production efficiency.

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