Question

Let V denote the number of units of a variable input (i.e., nitrogen fertilizer) that is used in combination with a fixed input (i.e., land).

Let TP denote the total amount of production of a crop (i.e., corn) that is obtained from using each input level.  

Point A is a point of inflection.

1. TP increases at a decreasing rate ____________.  (Points: 20)

a. from O to A

b. from A to C

c. beyond point O

d. beyond point C

2. MP equals zero at ____________.  (Points: 20)

a. point A

b. point B

c. point C

d. only A and C

e. every point on the TP curve

3. The point of diminishing marginal product is ____________.  (Points: 20)

a. point O

b. point A

c. point B

d. point C

4. TP is at maximum at ____________.  (Points: 20)

a. point O

b. point A

c. point B

d. point C

5. TP experiences negative marginal returns ____________.  (Points: 20)

a. from O to A

b. from O to B

c. from A to C

d. from B to C

e. beyond C

Answer 1

1. Since A is the inflection point, i.e., the slope of TP curve (MP) is maximum
at point A. Post the inflection point, MP or TP slope starts to decrease.
Therefore TP increases at decreasing rate after the inflection point making option
(b) the correct one - From A to C.

Besides, TP is not beyond point O as it can't be negative. Beyond point C,
TP decreases.

2. TP starts to fall beyond point C. Therefore MP (slope of TP curve) is
zero at point C.

3.At the inflection point, MP is maximum and starts to fall. At point C, MP becomes zero. Point O is the origin (rued out). Therefore the correct alternative is (b.) - Point A.

4.TP is maximum at point C (MP=0). Post that its starts to fall. Therefore (d.) is the correct option - Point C.

5.TP slope (or MP) becomes negative beyond point C which implies that TP experiences negative marginal returns beyond C. Therefore option (e.) - Beyond C is the correct answer.