PRC-3 · Chapter 12 · Question 12 of 69
In the initial stage (Stage I) of the Law of Variable Proportions, what is the behavior of the Marginal Product (MP) curve as more variable inputs are added to the fixed capital?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It increases
Explanation
In Stage I (Increasing Returns), adding workers allows for better specialization and utilization of fixed capital, causing the Marginal Product to rise.
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