CA Foundation · Business Economics · Theory of Production and Cost
When average product is at its maximum point on a graph, which of the following must be true about marginal product?
When average product is maximized, marginal product equals average product. This is where the marginal product curve intersects the average product curve from above, marking the transition from rising to falling average product.
- AMarginal product equals average productCorrect
- BMarginal product is less than average product
- CMarginal product is greater than average product
- DMarginal product is zero
Explanation
At the point where average product reaches its maximum, marginal product must equal average product. This is a fundamental principle: when AP is rising, MP > AP; when AP falls, MP < AP. Therefore, at the peak of AP, they must intersect, meaning MP = AP. This is the mathematical relationship between any average and marginal curve.
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