Consider the following statements about the average product (AP) of a variable input:
(A) AP is the output per unit of the variable input.
(B) For the first unit of the variable input, AP is equal to the marginal product (MP).
(C) While MP is rising, AP also rises, but by less than MP.
(D) AP is at its maximum at the level where MP is at its maximum.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B) and (C) only
(A) AP is the output per unit of the variable input. — Correct. This is the meaning of average product.
(B) For the first unit of the variable input, AP is equal to the marginal product (MP). — Correct. With one unit, the output of that unit is both the average and the addition.
(C) While MP is rising, AP also rises, but by less than MP. — Correct. AP is the average of the MPs, so it rises more slowly than MP.
(D) AP is at its maximum at the level where MP is at its maximum. — Incorrect. AP keeps rising as long as MP is above it, even after MP starts to fall. AP is highest where MP cuts AP, which comes after the peak of MP.
NCERT (2026-27): “3.3.2 Average Product Average product is defined as the output per unit of variable input. … Values in this column are obtained by dividing TP (column 2) by L (Column 1). …” “3.5 Shapes of Total Product, Marginal Product and Average Product Curves … Let us now see what the AP curve looks like. For the first unit of the variable input, one can easily check that the MP and the AP are same. Now as we increase the amount of input, the MP rises. AP being the average of marginal products, also rises, but rises less than MP. Then, after a point, the MP starts falling. However, as long as the value of MP remains higher than the value of the AP, the AP continues to rise. Once MP has fallen sufficiently, its value becomes less than the AP and the AP also starts falling. So AP curve is also inverse ‘U’-shaped.” “3.5 Shapes of Total Product, Marginal Product and Average Product Curves … As long as the AP increases, it must be the case that MP is greater than AP. Otherwise, AP cannot rise. Similarly, when AP falls, MP has to be less than AP. It, follows that MP curve cuts AP curve from above at its maximum.” |