The correct answer is Option (4) → (B), (C) and (D) only
(A) Average product and marginal product curve are 'U'shaped. (Incorrect).Cost curves (like Average Total Cost, Average Variable Cost, Marginal Cost) are typically U-shaped. Product curves (AP and MP) are typically inverse 'U' shaped, rising initially due to increasing returns and then falling due to diminishing returns.
(B) Average product and marginal product curve are inverse 'U'shaped. (Correct). As more units of a variable input are added to a fixed input, output initially increases at an increasing rate (MP rises), then at a decreasing rate (MP falls but is still positive), causing AP to rise. Eventually, MP falls below AP, causing AP to fall. This gives them an inverse U-shape.
(C) When the average product increases, the marginal product is greater than the average product. (Correct). This is a fundamental relationship. For the average to be rising, the marginal addition must be greater than the current average. Think of batting averages: if a player's score in the current inning (marginal) is higher than their average score, their average will increase.
(D) When the average product decreases, the marginal product is less than the average product. (Correct). This is also a fundamental relationship. For the average to be falling, the marginal addition must be less than the current average. If a player's score in the current inning (marginal) is lower than their average score, their average will decrease. |
