Q137
Marginal physical product of a variable input is negative
A.
Only in 1st stage
B.
Only in 3rd stage
C.
Only in 2nd stage
D.
In 2nd and 3rd stages
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
The marginal physical product (MPP) of a variable input becomes negative in the short run when the law of diminishing returns sets in. This typically occurs in the 2nd stage and continues into the 3rd stage. In the short run, as more of a variable input (like labor) is added to a fixed input (like land), the additional output (marginal product) may initially increase but eventually starts to decrease, leading to a negative marginal physical product. Therefore, in this context, the correct option is Option D: In 2nd and 3rd stages.