Identify the incorrect statement about the relation between Marginal Product(MP) and Average Product (AP). |
As long as the AP increases, it must be the case that MP is greater than AP. when AP falls, MP has to be less than AP. MP curve cuts AP curve from above at its maximum. AP can fall even when MP is rising. |
AP can fall even when MP is rising. |
The correct answer is Option (4) → AP can fall even when MP is rising. According to the relationship between Marginal Product (MP) and Average Product (AP):
Therefore, AP cannot fall when MP is rising, because a rising MP indicates it is above AP, which would make AP increase, not decrease. |