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Joan grows pumpkins. If Joan plants no seeds on her farm, she gets no harvest. If she plants 1 bag of seeds, she gets 500 pumpkins. If she plants 2 bags, she gets 800 pumpkins. If she plants 3 bags, she gets 900 pumpkins. A bag of seeds costs $100, and seeds are her only cost. Joan's production function exhibitsA. Increasing marginal product. B. Decreasing marginal product. C. Constant marginal product. D. Any of the above could be correct.

Respuesta :

Answer: Option (B) is correct.

Explanation:

Correct option: Decreasing marginal product.

Marginal product is the change in the level of output, when there will be an extra input employed in the production of a certain commodity.

So, Marginal Product = [tex]\frac{change\ in\ Q}{Change\ in\ I}[/tex]

Where,

Q = Output

I = Input

Marginal product of 1st bag = 500

Marginal product of 2nd bag =  [tex]\frac{800-500}{2-1}[/tex] = 300

Marginal product of 3rd bag =  [tex]\frac{900-800}{3-2}[/tex] = 100

∴ From the above calculations, we can seen that as we employed one more bag of seeds as a result marginal product goes on diminishing.

Hence, Joan's production function exhibits decreasing marginal product.

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