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14 May, 04:24

If marginal product is greater than average product:

A. we cant determine whether average product is rising or falling

B. average product must be falling

C. average product must be constant

D. average product must be rising

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  1. 14 May, 05:25
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    (D). Average product must be rising.

    Explanation:

    Average product is gotten by dividing the total product of a firm, by the labor quantity (such as the number of workers). This gives the average product per worker.

    Marginal product shows the change in total productivity caused by an additional unit of labor (such as a newly hired worker).

    If the extra productivity brought about by an additional worker (marginal product) is higher than the average productivity per worker in a firm (the average product), then this marginal productivity, when added to the total, will raise the average productivity of the firm.

    This explains why "average product must be rising as long as marginal product is greater than it."

    Similarly, once marginal productivity drops below average productivity, then average product starts to decline.
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