1.
If marginal physical product is decreasing with additional input, marginal value product will be
(1pts)
increasing
decreasing
constant
decreasing and equal to MPP
Solution
If marginal physical product is decreasing with additional input, marginal value product will be
DECREASING.
In economics, the marginal product of labor ( MP L ) is the change in output that results from
employing an added unit of labor.
Marginal Revenue Product (MRPL) measures the change in total revenue for a firm from
selling the output produced by additional workers.
MRPL = Marginal Physical Product x Price of Output per unit
MC = ?VC??q;
?VC = w?L;
?L??q the change in quantity of labor to affect a one unit change in output = 1?MP L .
Therefore MC = w ? MP L
Thus if the marginal product of labor is rising then marginal costs will be falling and if the
marginal product of labor is falling marginal costs will be rising (assuming a constant wage
rate)

2.
The falling MP L is due to the law of diminishing marginal returns. The law states,