Answer to Question #88136 in Microeconomics for Diane Kabanyana

Question

[5 points] For what values of β is the marginal product of labor increasing in the amount of labor used? For what values of β is it decreasing? For which values of β does the Law of Diminishing Marginal Returns hold? Why? [Hint: You might consider the values of β for which the partial derivative of the marginal product of labor with respect to the amount of labor used is positive to answer the first part of the question

Answer 1

Marginal product of labor decreases at any amount of labor used according to the law of diminishing marginal returns regardless of whether the production function exhibits increasing, decreasing or constant returns to scale.