High School

Which of the following is true of the typical relationship between marginal product (MP) and average product (AP)?

A) The AP curve intersects the MP curve at minimum MP.
B) If MP is less than AP, then AP is increasing.
C) If MP is greater than AP, then AP is falling.
D) The MP curve intersects the AP curve at maximum AP.

Answer :

Final answer:

The MP curve and AP curve intersect when AP is at its maximum , hence answer D) the MP curve intersects the AP curve at maximum AP is correct .

Explanation:

The relationship between marginal product (MP) and average product (AP) is a fundamental concept in economics, particularly in the study of production functions. The correct statement in this case is: The MP curve intersects the AP curve at maximum AP. When MP is greater than AP, the average product curve is increasing—this means each additional unit of labor or input is producing more than the average, which pulls up the overall average. Conversely, if MP is less than AP, then the average product curve is declining because the additional unit of input produces less than the average, hence dragging the average down. The point where MP and AP intersect represents the peak efficiency of production, at which AP is at its maximum.