Multiple Choice
Which of the following statements is true about the production of goods according to the Production Possibilities Frontier (PPF)?
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2. Introductory Economic Models
Production Possibilities Frontier (PPF) - Introduction and Productive Efficiency
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following is true when total product is at its maximum on a production possibilities frontier (PPF)?
A
Marginal product is zero.
B
Marginal product is at its maximum.
C
Average product is at its maximum.
D
Total product is increasing at an increasing rate.
Verified step by step guidance1
Understand the relationship between total product (TP), marginal product (MP), and average product (AP) in production theory. Total product is the total output produced, marginal product is the additional output from one more unit of input, and average product is the output per unit of input.
Recall that the marginal product is the slope of the total product curve. When total product is increasing, marginal product is positive; when total product reaches its maximum, the slope of the total product curve is zero, meaning marginal product is zero.
Recognize that when total product is at its maximum, the marginal product cannot be at its maximum because marginal product decreases to zero at that point.
Understand that average product is at its maximum when marginal product equals average product, which typically occurs before total product reaches its maximum.
Note that total product increasing at an increasing rate means the marginal product is increasing, which contradicts the condition of total product being at its maximum.
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