Capital is held fixed. The average product of labour is 20 units with 1 worker, 25 units with 2 workers and 24 units with 3 workers. Which of the following is correct?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → MP is highest at the 2nd worker (30 units); AP is also highest there (25 units).
Given:
AP with 1, 2, 3 workers = 20, 25, 24 units
TP = AP × L, and MP is the change in TP.
\( TP = 20,\ 50,\ 72 \)
\( MP = 20,\ 30,\ 22 \)
MP is highest at the 2nd worker (30 units), and AP is highest there too (25 units). At the 3rd worker MP (22) is below AP, so AP falls.
Option (1) MP is highest at the 2nd worker (30 units); AP is also highest there (25 units). — Correct. Both peaks are at the 2nd worker.
Option (2) MP is highest at the 1st worker (20 units), where MP equals AP. — Incorrect. MP equals AP at the 1st worker, but MP rises to 30 at the 2nd.
Option (3) MP is highest at the 2nd worker (25 units), the same as AP at that level. — Incorrect. 25 is the AP of 2 workers. MP of the 2nd worker is 30.
Option (4) MP is highest at the 3rd worker (24 units), where it equals AP. — Incorrect. 24 is the AP of 3 workers. MP of the 3rd worker is 22.
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.” |