Consider a firm in the short run.Average product is at its maximum when
A)marginal product is maximized.
B)average product equals marginal product and marginal product is falling.
C)diminishing returns cease to operate.
D)total product is maximized.
E)the maximum quantity of the variable input is employed.

Question

Quizplus · Accepted Answer

Average product is at its maximum when the marginal product equals the average product and the marginal product is falling. This is because as the marginal product falls, it brings down the average product, but as long as the marginal product is above the average product, it is pulling the average up. The point at which they are equal and the marginal product is falling is the maximum point for average product.

Consider a Firm in the Short Run