When total product is increasing but at a decreasing rate, what happens to the marginal product?

• A. Marginal product is positive but decreasing
• B. Marginal product is constant
• C. Marginal product is increasing
• D. Marginal product is negative

Answer: (A)

Verified step by step guidance

1. Understand the relationship between total product (TP) and marginal product (MP). Marginal product is the additional output produced by adding one more unit of input, mathematically defined as \(MP = \frac{\Delta TP}{\Delta input}\).
2. When total product is increasing, it means that each additional unit of input is still producing more output, so marginal product must be positive (greater than zero).
3. However, if total product is increasing at a decreasing rate, the slope of the total product curve is getting flatter. This means the increments in output from each additional input are getting smaller.
4. Since marginal product is the slope of the total product curve, a decreasing rate of increase in total product implies that marginal product is positive but decreasing.
5. Therefore, the correct interpretation is that marginal product remains positive but declines as more input is added, reflecting diminishing marginal returns.