[amp_mcq option1=”marginal product will be more than average product” option2=”marginal product will be lesser than average product” option3=”marginal and average product will be equal” option4=”total, marginal and average product will be equal” correct=”option3″]<\/p>\n
The correct answer is: C. marginal and average product will be equal.<\/p>\n
The law of constant returns to scale states that in the short run, when all inputs are increased by a constant proportion, output will increase by the same proportion. This means that the marginal product of each input is constant.<\/p>\n
The marginal product of an input is the additional output that is produced when one more unit of that input is used. The average product of an input is the total output produced divided by the number of units of that input used.<\/p>\n
When the law of constant returns to scale applies, the marginal product of each input is equal to the average product of that input. This means that each additional unit of input produces the same amount of additional output as the previous unit of input.<\/p>\n
For example, if a company has one worker and produces 10 units of output, the average product of labor is 10 units per worker. If the company hires another worker, the total output increases to 20 units. The average product of labor is now 10 units per worker, which is the same as the marginal product of labor.<\/p>\n
The law of constant returns to scale is a useful tool for understanding how businesses operate. It can be used to predict how output will change in response to changes in input levels. It can also be used to compare the efficiency of different businesses.<\/p>\n","protected":false},"excerpt":{"rendered":"
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