CA Foundation · Business Economics · Theory of Production and Cost
When the total product (TP) of labour reaches its maximum point, which of the following must be true of marginal product (MP)?
Marginal product equals zero when total product is at its maximum. At that point an additional unit of labour adds nothing to total output. Before this point MP is positive and TP is rising; beyond it MP becomes negative and TP falls.
- AMP is at its maximum
- BMP is equal to zeroCorrect
- CMP is negative
- DMP is equal to average product
Explanation
MP is the change in TP from one more unit of labour. At the peak of TP, an extra worker adds nothing, so MP is zero. Before the peak MP is positive, and after it MP turns negative. MP equals AP only at the maximum of AP, not at the peak of TP.
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