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When the additional unit of input is ‘crowded’ in the production, the output is proportionally less and ...... |
Total product begins to fall. Marginal product begins to fall. Average product begins to rise. Total product begins to rise. |
Marginal product begins to fall. |
The correct answer is Option (2) → Marginal product begins to fall. When an additional unit of input (like labor) is added while keeping other inputs (like capital) fixed, and this input becomes ‘crowded’, the production process becomes less efficient. As a result, the additional output contributed by each new unit of input — i.e., the marginal product — starts to decline. This phenomenon is explained by the Law of Diminishing Marginal Returns, which states that after a certain point, adding more of a variable input to a fixed input results in decreasing marginal returns. |
