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Max Company produces electronic gadgets using labor and capital. If Max increases labor and decreases capital to produce the same quantity of gadgets, what will happen to the marginal product (MP) of labor and the MP of capital

Sagot :

Based on the information given, it can be deduced that the marginal product of labor will decrease and the marginal product of capital will increase.

From the information given, it was stated that Max Company produces electronic gadgets using labor and capital and that he increases labor and decreases capital in order to produce the same quantity of gadgets.

Due to this, according to the law of diminishing marginal productivity, the marginal product of labor will reduce and that of capital will rise.

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