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JAMB Economics 1998 Question 10

Question 10

Theory of Production

Which of the following statements best describes the relationship between average product and marginal product?

  1. A.Marginal product and average product curves rise and fall together.
  2. B.Marginal product equals average product at the minimum point of the latter.
  3. C.Average product curve will rise as long as marginal product is greater than average product.
  4. D.Marginal product equals average product at the maximum point of the former.
Show the answer and explanation

Answer: C (Average product curve will rise as long as marginal product is greater than average product.)

Explanation

When the extra output of a new worker (MP) is above the average, it pulls the average up, so AP rises while MP > AP. MP cuts AP at AP's highest point.