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MICROECONOMICS CH : 7 PRODUCTION FUNTION AND RETURNS TO A FACTOR — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsMICROECONOMICS CH : 7 PRODUCTION FUNTION AND RETURNS TO A FACTOR2 Marks
Question
Do you agree that TP must decrease in a situation of diminishing returns?
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Answer

No. TP should not be decreasing in a situation of diminishing returns. In a situation of diminishing returns, MP decreases (like from 10 to 9 to 8). It means less and less units of output are added to TP. Nevertheless, TP must be rising. TP decreases only in a situation of negative returns.

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