dolution

 

1. Fill in the blanks to make the following statements correct.

 

a. As more of a variable factor is used in combination with given quantities of fixed factors, the marginal product of the variable factor will eventually decrease. This hypothesis is known as the law of _____.

 

b. The change in total output resulting from the use of one additional unit of the variable factor is called the _____

 

 

c. If average product and marginal product curves are plotted on a graph, the AP curve is rising as long as the MP curve lies _____ the AP curve. The AP curve is falling when the MP curve lies _____ the AP curve.

 

d. Consider a firm whose only variable factor is labour. As the firm hires more labour, the point of diminishing marginal productivity sets in once the marginal product of labour reaches a _____ .

 

e. As more and more labour is applied to a fixed amount of physical capital, we can expect that the marginal product of labour will eventually _____. In the extreme, if total output decreases as additional labour is added, then the marginal product of labour has become _____.