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Explain hot the marginal product of labor and the average product of labor change as the quantity of labor employed increases initially and eventually?
Wiki User
∙ 13y ago
Initially, the MPL and APL fall since there can be no jump in the level of capital used by these workers, and thus output put worker is less than before. However, as time goes on, actual invesmtent exceeds break-even investment and the level of capital increases until the old equilibrium value of capital per worker is reached. At this point, after convergence or time, the MPL and APL are restored to their original values (ceteris paribus).
Wiki User
∙ 13y ago
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Why does the marginal product of labor eventually diminish?
Marginal product eventually diminishes because the cost of doing business increases with production. The company would need to make a change in the organization so that they can shift their production possibilities.
When total utility increases marginal utility is?
marginal utility decreases
Why does marginal cost rise as production increases?
Marginal cost is equal to the ratio of change in total cost or total variable cost to change in quantity of output. Marginal cost increases as total product increases since it reflects the law of diminishing marginal returns.
When marginal costs are below average cost at a given output one can deduce that if output increases what happens?
when marginal costs are below average cost at a given output, one candeduce that, if output increases dose average costs fall or marginal costs will fall
Increasing marginal utility of goods?
Not possible. Law of Diminishing Marginal utility states that equal additions to a good provide smaller and smaller increases in utility, therefore marginal utility decreases.
Why does the marginal product of labor eventually diminish?
Marginal product eventually diminishes because the cost of doing business increases with production. The company would need to make a change in the organization so that they can shift their production possibilities.
When total utility increases marginal utility is?
marginal utility decreases
Why does marginal cost rise as production increases?
Marginal cost is equal to the ratio of change in total cost or total variable cost to change in quantity of output. Marginal cost increases as total product increases since it reflects the law of diminishing marginal returns.
What is increasing returns to a factor?
It occurs when an additional unit of labour employed brings a marginal product greater than the previous marginal product.
When marginal costs are below average cost at a given output one can deduce that if output increases what happens?
when marginal costs are below average cost at a given output, one candeduce that, if output increases dose average costs fall or marginal costs will fall
Increasing marginal utility of goods?
Not possible. Law of Diminishing Marginal utility states that equal additions to a good provide smaller and smaller increases in utility, therefore marginal utility decreases.
What is the cost that increases with each additional unit produced?
Marginal cost of production
If marginal revenue product capital increases the demand or supply curve?
Demand.
If marginal utility is positive but diminishing then?
Total utility increases at a diminishing rate
Why does marginal cost fall and then start rising?
Marginal cost generally falls as quantity increases becausepeople learn to do their jobs better as they produce more
Why does the marginal rate of substitution diminish?
As a matter of fact, law of diminishing marginal rate of substitution conforms to the law of diminishing marginal utility. According to law of diminishing marginal utility, as a consumer increases the consumption of a good, its marginal utility goes on diminishing. On the contrary, if the consumption of a good decreases, its marginal utility goes on increasing.
Define diminishing marginal product of capital?
Diminishing marginal product of capital is an economic principle that refers to the concept that when the input is increased and the other inputs are kept at the same level than it may initially increase output. However, if the inputs continue to increase with no other changes there may be limited effect or eventually negative effect on the output.
