Multiple Choice QuestionWhich of the following increases marginal productivity and therefore its demand?Multiple choice question.Improvements in the quality of a variable resourceImprovements in the quantities of a variable resourceImprovements in the supply of a variable resourceImprovements in the demand of a variable resource
Question
Multiple Choice QuestionWhich of the following increases marginal productivity and therefore its demand?Multiple choice question.Improvements in the quality of a variable resourceImprovements in the quantities of a variable resourceImprovements in the supply of a variable resourceImprovements in the demand of a variable resource
Solution
The answer is "Improvements in the quality of a variable resource".
Here's why:
Marginal productivity refers to the additional output that can be produced by adding one more unit of a specific input, while keeping other inputs constant.
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Improvements in the quality of a variable resource: This can increase marginal productivity because a higher quality resource can produce more or better output. For example, a more skilled worker (a higher quality resource) can produce more output than a less skilled worker.
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Improvements in the quantities of a variable resource: This does not necessarily increase marginal productivity. In fact, according to the law of diminishing returns, beyond a certain point, adding more of one variable resource, while keeping others constant, will actually decrease marginal productivity.
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Improvements in the supply of a variable resource: This also does not necessarily increase marginal productivity. While it might increase the total amount of output, it does not necessarily increase the output per unit of input.
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Improvements in the demand of a variable resource: This does not directly affect marginal productivity. It might increase the price of the resource, but it does not affect the output per unit of input.
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