Which of the following statement is incorrect ?

Question

Accepted Answer

The correct option is 4:

This question tests your understanding of the fundamental relationships between Total Physical Product (TPP), Marginal Physical Product (MPP), and Average Physical Product (APP). The correct option is the statement that is *incorrect* regarding these concepts. The relationship stated in Option 4, "MPP is the ratio of TPP to the level of employment," is incorrect. The Marginal Physical Product (MPP) is actually the *change* in TPP resulting from employing one additional unit of the variable factor. Mathematically, $MPP = \Delta TPP / \Delta L$. The ratio of TPP to the level of employment (TPP / L) is, by definition, the Average Physical Product (APP). Therefore, this statement incorrectly defines MPP, making it the incorrect statement among the choices.

The incorrect option is 1: MPPs are additions to the TPP.
This statement is correct. Marginal Physical Product represents the additional output gained from one more unit of input; when you add up these additional units (MPPs), they sum up to the Total Physical Product.

The incorrect option is 2: TPP is the sum of MPPs.
This statement is correct and expresses the same fundamental principle as Option 1, just stated differently. The total output generated (TPP) must be equal to the sum of the output contributed by each unit of the variable input (MPPs).

The incorrect option is 3: TPP is the multiplication of APP and the level of employment.
This statement is correct. Since Average Physical Product (APP) is calculated as $TPP / L$, rearranging this formula shows that TPP must be equal to the Average Product multiplied by the level of employment ($TPP = APP \times L$).