{"id":51180,"date":"2024-04-15T23:21:07","date_gmt":"2024-04-15T23:21:07","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=51180"},"modified":"2024-04-15T23:21:07","modified_gmt":"2024-04-15T23:21:07","slug":"statement-i-the-least-cost-or-optimal-input-combination-of-labour-capital-requires-that-the-marginal-revenue-productivity-ratio-of-the-two-inputs-should-be-equal-to-their-price-ration-statement-ii-in","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/statement-i-the-least-cost-or-optimal-input-combination-of-labour-capital-requires-that-the-marginal-revenue-productivity-ratio-of-the-two-inputs-should-be-equal-to-their-price-ration-statement-ii-in\/","title":{"rendered":"Statement I The least-cost or optimal input combination of labour capital requires that the marginal revenue productivity ratio of the two inputs should be equal to their price ration. Statement II In a hypothetical production function of the following from Q = L3 + 15L2 + 10 Where Q = Quantity of the product and L = No. of variable input (labour) the marginal physical productivity of labour is L2 + 15L + 10"},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a9762abd70d7\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"false\">\r\n                    Both, statements are true                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    Both, statements are false                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"true\">\r\n                    Statement I is true while Statement II is false                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"false\">\r\n                    Statement I is false, while Statement II is true                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: <strong>C. Statement I is true while Statement II is false.<\/strong><\/p>\n<p>Statement I is true. The least-cost or optimal input combination of labour capital requires that the marginal revenue productivity ratio of the two inputs should be equal to their price ration. This is known as the <strong>marginal productivity theory of factor demand<\/strong>. It states that a firm will hire workers up to the point where the marginal revenue product of labor equals the wage rate. <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> Similarly, a firm will rent capital up to the point where the marginal revenue product of capital equals the rental rate.<\/p>\n<p>Statement II is false. The marginal physical productivity of labor is not equal to $L^2 + 15L + 10$ in the hypothetical production function $Q = L^3 + 15L^2 + 10$. The marginal physical productivity of labor is the change in output that results from a one-unit change <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> in labor input, holding all other inputs constant. In this case, the marginal physical productivity of labor is $3L^2 + 15L$.<\/p>\n<p>To see this, let&#8217;s consider the following table:<\/p>\n<p>| Labor input (L)| Output (Q)| Marginal physical productivity of labor (MP) |<br \/>\n|&#8212;|&#8212;|&#8212;|<br \/>\n| 0 | 0 | 0 |<br \/>\n| 1 | 10 | 10 |<br \/>\n| 2 | 35 | 25 |<br \/>\n| 3 | 70 | 35 |<br \/>\n| 4 | 115 | 45 |<br \/>\n| 5 | 165 | 50 |<\/p>\n<p>As you can see, the marginal physical productivity of labor is increasing at first, but then it starts to decrease. This is because as we add more and more labor, each additional worker produces less and less output. This is because the workers start to get in each other&#8217;s way and there are diminishing returns to labor.<\/p>\n<p>In conclusion, Statement I is true while Statement II is false.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Join Our Telegram Channel Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Statement I The least-cost or optimal input combination of labour capital requires that the marginal revenue productivity ratio of the two inputs should be equal to their price ration. 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