Identify the correct sequence for a firm operating in the short run. (A) Total product increases at a decreasing rate. Choose the correct answer from the options given below: |
(D), (C), (B), (A) (B), (C), (A), (D) (D), (C), (A), (B) (C), (B), (D), (A) |
(D), (C), (A), (B) |
The correct answer is Option (3) → (D), (C), (A), (B) (D) More and more units of variable factor are employed — This happens first as the firm increases the use of a variable input (like labour). (C) Marginal product increases — Initially, due to better utilization of fixed factors, the marginal product of the variable factor rises. (A) Total product increases at a decreasing rate — After a point, marginal product starts declining, so total product still rises but at a diminishing rate. (B) Marginal product becomes zero — Finally, when too many variable inputs are used, marginal product falls to zero (and can even become negative beyond this). |