Question

If the elasticity of production is 0.2 and the APP is 10, then what is the marginal physical product?

• A. 20.00
• B. 0.20
• C. 2.00
• D. 50.00

Hint:

When elasticity of production is less than 1, the Marginal Physical Product (MPP) must be smaller than the Average Physical Product (APP). This rule allows you to quickly verify the logical correctness of your answer.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
The elasticity of production ($E_p$) reflects the responsiveness of output to a change in input, and it serves as a bridge between marginal and average productivity.

Step 2: Key Formula or Approach:
The mathematical relationship is:
\[ E_p = \frac{\text{MPP}}{\text{APP}} \]
By rearranging this formula, we can solve for Marginal Physical Product (MPP):
\[ \text{MPP} = E_p \times \text{APP} \]

Step 3: Detailed Explanation:
We are given:
- Elasticity of production ($E_p$) $= 0.2$
- Average Physical Product ($\text{APP}$) $= 10$
Using the rearranged formula:
\[ \text{MPP} = 0.2 \times 10 \]
\[ \text{MPP} = 2.00 \]
Thus, the marginal physical product is 2.00.
Final Answer:
The marginal physical product is 2.00, matching Option (C).