The general shape of TPP in the short run isa)V- shapedb)Hyperbolac)U ...
Both the Short-run average total cost curve (SRAC) and Long-run average cost curve (LRAC) curves are typically expressed as U-shaped.
The general shape of TPP in the short run isa)V- shapedb)Hyperbolac)U ...
Explanation:
TPP refers to Total Physical Product, which is the total output produced by a firm using various inputs. In the short run, the TPP curve takes on a particular shape depending on the marginal product of labor. The correct answer to the question is option 'D,' which is the inverse U-shaped curve. Let's understand why:
1. Law of Diminishing Marginal Returns:
As a firm increases its labor input, the marginal product of labor initially increases but eventually decreases. This is due to the law of diminishing marginal returns, which states that as additional units of a variable input (such as labor) are added to a fixed input (such as capital), the marginal product of the variable input will eventually decrease.
2. The Shape of TPP Curve:
The TPP curve initially increases at an increasing rate, which means the marginal product of labor is increasing. This is the upward sloping part of the curve. As more labor is added, the marginal product of labor starts to decrease, causing the TPP curve to increase at a decreasing rate. This is the top of the curve, where TPP is at its maximum. Eventually, the marginal product of labor becomes negative, causing the TPP curve to decrease. This is the downward sloping part of the curve.
3. Inverse U-Shaped Curve:
The TPP curve takes the shape of an inverse U-shaped curve because of the law of diminishing marginal returns. The initial increase in TPP is due to the increasing marginal product of labor, followed by a decrease in TPP due to diminishing marginal returns. This results in the TPP curve taking on an inverse U-shaped curve.
Conclusion:
In the short run, the TPP curve takes on an inverse U-shaped curve due to the law of diminishing marginal returns. This curve shows the relationship between the total output produced by a firm and the amount of labor used to produce it.