Consider the following statements. 1. MP is also called MPP. 2. Physical product refers to production as measured in terms of physical units of the commodity. 3. TP increases even when MP is decreasing. Which of the statement(s) given above is/are correct?

The correct answer is: C. Both 1 and 2

• MP is also called MPP.

Marginal product (MP) is the additional output produced by adding one more unit of input. Marginal physical product (MPP) is the additional output produced by adding one more unit of labor. Therefore, MP is also called MPP.

• Physical product refers to production as measured in terms of physical units of the commodity.

Physical product (TP) is the total output produced by a firm or industry. It is measured in physical units, such as tons of steel, barrels of oil, or number of cars.

• TP increases even when MP is decreasing.

This is because the law of diminishing returns states that as more and more of a variable input is added to a fixed input, the marginal product of the variable input will eventually decline. However, the total product may still increase even when the

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