Which of the following statement is correct?
A) When Marginal Product is greater than Average Product, Average Product is increasing.
B) When Marginal Product is greater than Average Product, Average Product is decreasing.
C) When Marginal Product is greater than Average Product, Average Product is equal to Total Product.
D) When Marginal Product is greater than Average Product, Total Product is increasing at a decreasing rate.

Question

Quizplus · Accepted Answer

When Marginal Product is greater than Average Product, it means that the last unit of input added is producing more output than the previous units. This causes the Average Product to increase because the total output is increasing at a faster rate than the total input.

Which of the Following Statement Is Correct