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A worker schedule shows TP of 100 at 1 worker, 210 at 2 workers, and 330 at 3 workers. Over this range the marginal product is:
Arising, indicating increasing returns
Bconstant at 100 units throughout
Cfalling but still positive
Dnegative for the 3rd worker
Answer & Solution
Correct answer: A. rising, indicating increasing returns
1. Compute MP using $MP_n = TP_n - TP_{n-1}$.
2. $MP_1 = 100$, $MP_2 = 210 - 100 = 110$, $MP_3 = 330 - 210 = 120$.
3. MP rises from 100 to 110 to 120, so marginal product is increasing, the stage of increasing returns.
4. It is not constant, not falling, and the 3rd worker's MP of 120 is clearly positive.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 3 Unit I "Theory of Production", p.17_
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