In inverse 'U'-shaped average product curve, as long as the value of Marginal Product remains higher than the value of the average product, in this condition the average product continues to..............
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Rise
The Average Product (AP) curve is inverse U-shaped, showing that:
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Initially, AP increases as more units of the variable factor (like labour) are employed.
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After reaching a maximum point, AP starts to fall.
The relationship between Marginal Product (MP) and Average Product (AP) is as follows:
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When MP > AP, the AP rises.
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When MP = AP, the AP is at its maximum.
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When MP < AP, the AP falls.
Hence, as long as the Marginal Product is greater than the Average Product, the Average Product continues to rise.
