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Question
If marginal product is equal to average product, then ________.
If marginal product is equal to average product, then ________.
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Solution
The correct option is D average product is not changing
When the MP curve is higher than the AP curve, i.e., the MP > AP the average product will tend to rise as if you take a higher number and add it to the average and then take a new average, the new average has to be higher. At some point the MP will stop rising and begin falling to a point where it will meet the AP curve. Thus only when the MP < AP will the AP curve begin to fall as now a lower number is being added, and the new average must be lower. Thus the point at which the MP meets the AP curve, AP has to be at its maximum and stationary(not changing).
When the MP curve is higher than the AP curve, i.e., the MP > AP the average product will tend to rise as if you take a higher number and add it to the average and then take a new average, the new average has to be higher. At some point the MP will stop rising and begin falling to a point where it will meet the AP curve. Thus only when the MP < AP will the AP curve begin to fall as now a lower number is being added, and the new average must be lower. Thus the point at which the MP meets the AP curve, AP has to be at its maximum and stationary(not changing).
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