The correct answer is option 2: i, ii and iii
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MP (Marginal Product) curve initially rises, reaches a peak, and then falls → True
- The MP curve initially rises, reaches a peak, and then falls, as it follows the Law of Variable Proportions, where MP increases, then decreases, and eventually becomes negative.
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AP (Average Product) is inverse U-shaped → True
- The AP curve first rises, reaches a maximum, and then falls, making it inverse U-shaped.
- This follows the pattern of increasing returns (AP rising) and diminishing returns (AP falling).
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TP (Total Product) is positively sloping → True
- TP increases as more inputs are used, making it a positively sloping curve.
- However, the rate of increase slows down due to diminishing returns, and at a certain point, TP starts to decline when MP becomes negative.
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