CA Foundation · Business Economics · Theory of Production and Cost
In the short run, when total product (TP) reaches its maximum point, which of the following must be true of marginal product (MP) at that point?
At the point where total product is maximum, marginal product is zero. Total product keeps rising while marginal product is positive, and it peaks when an additional unit of the variable input adds nothing to output. Marginal product becomes negative only afterwards.
- AMP is at its maximum
- BMP is equal to average product
- CMP is zeroCorrect
- DMP is negative
Explanation
MP is the change in TP from one more unit of the variable input. TP rises as long as MP is positive and peaks when an extra worker adds nothing, so MP = 0 there. MP turns negative only after TP starts to fall.
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