Question

Evaluate the following statements as true or false and provide your reasoning. [5 pts. each] When...

Evaluate the following statements as true or false and provide your reasoning. [5 pts. each]

When MPL is less than APL, APL will fall.

When MPL equals zero, APL will also equal zero.

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Answer #1

Answer:- When MPL is less than APL, APL will fall.

Correct Answer:- True

Reason:-  that average product is at a maximum when it equals marginal product. Prior to that point, average product is rising because marginal product is higher. After that point, just the opposite occurs, marginal product is below average product so average product is falling as the firm hires more labor.

Answer:- When MPL equals zero, APL will also equal zero.

Correct Answer:- False

Reason:- when the marginal product is equal to zero that the production function is at its maximum. Thereafter, since the marginal product is negative, the production function decreases with increases in the amount of labor hired by the firm.

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