The diagram illustrates a firm’s average physical product of labour and marginal physical product of labour curves. What conclusion can be drawn from the diagram?
- AAPPL declines beyond OL2 as a result of diseconomies of scale.
- BA profit-maximising firm would never hire more than OL2 labour hours.
- CBetween OL1 and OL2, each extra labour hour hired causes both MPPL and APPL to decline.
- DDiminishing returns first set in when the number of labour hours hired reaches OL1.