Question

The average product of labour is maximized when marginal product of labour _________.

• A. equals the average product of labour
• B. equals zero
• C. is maximized
• D. none of the above

Answer 1

The correct option is A equals the average product of labour

When the MPL curve is higher than the APL curve, ie the MPL $\ge$ APL 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 MPL will stop rising and begin falling to a point where it will meet the APL curve. Thus only when the MPL $\le$ APL 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 that the MPL meets the APL curve, has to be its maximum point.