What is the relationship between marginal product and average product?
Understand the Problem
The question is asking about the economic concepts of marginal product and average product, specifically how these two measures relate to each other in production theory.
Answer
When Average Product (AP) is rising, Marginal Product (MP) lies above AP. At the maximum of AP, MP equals AP. When AP is declining, MP lies below AP.
The relationship between Marginal Product (MP) and Average Product (AP) is such that when AP is rising, MP is above AP; when AP is at its maximum, MP equals AP; and when AP is falling, MP is below AP.
Answer for screen readers
The relationship between Marginal Product (MP) and Average Product (AP) is such that when AP is rising, MP is above AP; when AP is at its maximum, MP equals AP; and when AP is falling, MP is below AP.
More Information
In economics, understanding the relationship between MP and AP helps firms optimize resource allocation and production efficiency. The relationship illustrates the law of diminishing returns.
Tips
A common mistake is to confuse the points where MP and AP are equal with where one is always greater than the other. Remember that MP can be either greater or lesser than AP, defining the rise or fall of AP.
Sources
AI-generated content may contain errors. Please verify critical information
