PRC-3 · Chapter 12 · Question 41 of 69
In the first stage of the law of variable proportions, adding more workers allows them to divide tasks and specialize, making the factory highly efficient. What happens to the Marginal Product (MP) during this stage?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It slopes upward (increases)
Explanation
In Stage I (Increasing Returns), the marginal product of each additional worker rises because the fixed machinery is being utilized much more efficiently.
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