In the SR, the Average Product of labor:
a) is increasing when the total product of labor is increasin
b) is at maximum where it intersects the Marginal product of labor
c) is upward-sloping if the firm is eperiencing diminishing marginal returns to labor
So the answer is B. However, the issue i have with this question is that it could also be A, because the Average Product of labor is also 1st increasing and then decreasing as diminishing marginal returns take effect.
I dont understand why they threw 2 legit answers in there. Anyone got some clarification on this?作者: Analyze_This 时间: 2013-4-28 11:27
作者: Andreas42 时间: 2013-4-28 11:27
So from the range of 1-3 labor units, is AP not increasing?
[/quote]作者: ftwcfa 时间: 2013-4-28 11:27
Diminishing returns to labor. AP increases for the first few laborers but decreases over time. Yes AP increases between 1 and 2 but from 2 to 10 it decreases. I see your logic but B is the best answer as it happens 100% of the time.作者: bigredhockey55 时间: 2013-4-28 11:28
Heard eco questions are ery tuff in CFA mock作者: bleach 时间: 2013-4-28 11:28
Edit: I deleted my original post because it was incorrect.作者: mouse123 时间: 2013-4-28 11:28
a) is increasing when the total product of labor is increasin
Answer A is implying it ALWAYS increases when total product of labor is increasing, that is not correct.
