State the behaviour of MPP, under Returns to a factor.

1.	State the behaviour of MPP, under Returns to a factor.
Answer» Answer : In SHORT run, when one factor input is variable and other factors are fixed `q=f(x_1barx_2)`marginal PHYSICAL product changes in the following ways : (i) MPP INITIALLY increases and becomes maximum (Phase I) (ii) MPP then decreases positively and becomes zero (Phase II) (III) MPP becomes negative (Phase III).

Discussion