Studied by 2 people
What happens to TP in this curve?
TP increases as workers are added and then it peaks and starts decreasing as overmanning starts to become a problem.
Law of diminishing returns
What happens to AP?
Initially rises with the increase in TP but as diminishing returns sets in it’ll fall
If MP>AP then AP will decrease
If MP<AP then AP will rise
What happens to MP?
What is MP?
MP rises and falls due to the law of diminishing returns, but when MP=0 this will cause TP to peak because the increase in workers no longer means and increase in product. when MP<0 then TP will fall
Marginal product is the product that each new worker adds.
What makes the PPF curve curved and not straight?
Its curved because when changing what products they’re producing their skills aren’t 100% interchangeable which causes the graph to curve.
How can a PPF curve be straight?
If all the skills are interchangeable then a straight line can be drawn
law of contact returns
