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Question
The shape of AP curve has an ____.
The shape of AP curve has an ____.
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Solution
The correct option is B Inverse U shaped
The average product refers to the output per unit of a variable factor. It is also known as average returns. Initially there it too little of a variable input in comparison to the fixed input resulting in the underutilization of the fixed input. Thus as the quantity of variable input is initially increased, the fixed input is being better utilized, resulting in an increase in efficiency and thus the AP initially increases. However as more variable input is added beyond a point this leads to overcrowding and inefficiencies an thus it leads to falling productivity which leads to falling AP.
The average product refers to the output per unit of a variable factor. It is also known as average returns. Initially there it too little of a variable input in comparison to the fixed input resulting in the underutilization of the fixed input. Thus as the quantity of variable input is initially increased, the fixed input is being better utilized, resulting in an increase in efficiency and thus the AP initially increases. However as more variable input is added beyond a point this leads to overcrowding and inefficiencies an thus it leads to falling productivity which leads to falling AP.
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