Question

Given below are two statements:
Statement (I) : It is because of the law of variable proportions that MPP curve makes an inverted-U.
Statement (II) : Diminishing returns to a factor must lead to a fall in Marginal Physical Product (MPP) as well as Total Physical Product (TPP).
In light of the above statements, choose the most appropriate answer from the options given below:

• A. Both Statement (I) and Statement (II) are correct.
• B. Both Statement (I) and Statement (II) are incorrect.
• C. Statement (I) is correct but Statement (II) is incorrect.
• D. Statement (I) is incorrect but Statement (II) is correct.

Hint:

- When MPP is decreasing but positive, TPP is increasing at a decreasing rate.
- TPP decreases only when MPP becomes negative (Phase 3 of the Law of Variable Proportions).

Answer 1

The Correct Option is C