In the short run, the firm's product curves show
A) TP is at its maximum when MP is at its maximum.
B) when MP

Question

In the short run, the firm's product curves show
A) TP is at its maximum when MP is at its maximum.
B) when MP < AP, AP is increasing.
C) AP is at its minimum when MP = AP.
D) when the MP curve cuts the AP curve from above, the AP curve begins to fall.
E) TP begins to decrease when AP begins to decrease.

Quizplus · Accepted Answer

When the marginal product (MP) curve cuts the average product (AP) curve from above, it indicates that MP is decreasing and has fallen below AP, causing the AP curve to begin to fall.

In the Short Run, the Firm's Product Curves Show