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Q. 1. as per concepts of production function, indicate whether each of the following statements is true or false. Explicate your answers
a. decreasing returns to scale and increasing average costs are indicated when EQ<1
b. If the marginal product of capital falls as grows resources usage returns to resources are declining.
c. L-shaped iso-quant described production system in which inputs are perfect substitutes
d. Marginal revenue product measures the profit earned through expanding input usage.
e. the marginal rate of technical substitution will be affected by a given percentage increase in the marginal productivity.
2. Explain why the MP/P relation is deficient as the sole mechanism for determining the optimal level of resource employment. Production analysis and compensation analysis and compensation policy.
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