True or False
1.Total output may continue to rise even though the marginal physical product (MPP) is decreasing
Think about it, then take a shot. Hint: while MPP is decreasing, can it sign still be positive?
True.
To determine whether the statement is true or false, we need to understand the concepts of total output and marginal physical product (MPP).
Total output refers to the overall quantity or amount of goods or services produced by a firm over a given period. It is the sum of all individual units produced.
Marginal physical product (MPP) refers to the additional output that is produced by employing one more unit of a variable input, while keeping other inputs constant. It measures the rate at which total output changes when an additional input is added.
Now, it is possible for total output to continue rising even though the MPP is decreasing. This is because the MPP can still be positive even when it is declining.
To understand this, imagine the production process where workers are being added to a factory. Initially, as more workers are hired, the total output increases at a fast pace, and the MPP is high. However, as the workforce expands, the increase in total output from each additional worker begins to diminish. This means that the MPP starts to decline.
Although the MPP may be decreasing, as long as it remains positive, it means that each additional unit of input is still contributing to the overall increase in total output. Therefore, the total output can continue to rise even when the MPP is decreasing.
So, the statement is true.