Read the given paragraph carefully and answer the following questions.

Total Product, Average Product and Marginal Product

The relationship between the variable input and output, keeping all other inputs constant, is often referred to as total product (TP) of the variable input. Average product (AP) is defined as the output per unit of variable input. Marginal product (MP) of an input is defined as the change in output per unit of change in the input when all other inputs are held constant. According to the law of variable proportions, the marginal product of an input initially rises and then, after a certain level of employment, it starts falling. As long as 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.

Keeping the capital as a fixed input, as 3, when the quantity of labor changes from 3 to 4, the total product with labor also rises from 40 to 50 units. What is the average product after the change?

12.5

The correct answer is Option (3) → 12.5

Given:

• Total Product (TP) after the change = 50 units

• Labor after the change = 4 units

Average Product (AP)=Total Product (TP)/ Units of Labor

AP = 50 / 4 = 12.5​