- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 1. The Firm and Market Structures
- Subject 1. Supply Analysis: Cost, Marginal Return, and Productivity
CFA Practice Question
Refer to the graph below. At point A, ______
B. marginal product is maximum.
C. marginal product is zero.
A. marginal product is minimum.
B. marginal product is maximum.
C. marginal product is zero.
Correct Answer: B
At point A, total product begins to rise at a decreasing rate, meaning marginal product is at its maximum.
User Contributed Comments 5
| User | Comment |
|---|---|
| rana1970 | had the tangentail slope at point A and upward been more than that of the points below A, marginal product would have been greater(i.e TP would have been increasing at increasing rate), but here situation is reverse. |
| ljamieson | inflection point between convex/concave |
| Htoon | Marginal products are products that are produced by one additional worker. Suppose, now, one worker can produce 5 units. When the firm hire one more worker, the firm can produce 12 units. The difference of 2 units is marginal products. |
| bundy | Slope...if starts to decrease you have reached the point of maximum marginal output |
| Huricane74 | Thank you @LJamieson, @Bundy |