If the marginal product of labour is below the average product of labo...
If the marginal product of labor, , is greater than the average product of labor, , then each additional unit of labor is more productive than the average of the previous units. Therefore, by adding the last unit, the overall average increases. If is greater than , then is increasing.
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If the marginal product of labour is below the average product of labo...
Explanation:
Marginal Product of Labour (MPL):
- Marginal product of labour (MPL) is the additional output produced when an additional unit of labour is employed while keeping all other factors constant.
- MPL can be calculated as the change in total output divided by the change in the number of workers.
Average Product of Labour (APL):
- Average product of labour (APL) is the total output produced divided by the number of workers employed.
- APL can be calculated as the total output divided by the number of workers.
Relation between MPL and APL:
- If MPL is greater than APL, then APL is rising.
- If MPL is less than APL, then APL is falling.
- If MPL is equal to APL, then APL is constant.
Answer:
- The given statement says that MPL is below APL.
- Therefore, APL must be falling.
- Hence, the correct answer is option 'C'.
Example:
Suppose a firm produces 10 units of output with 2 workers and 15 units of output with 3 workers. Then,
- MPL of the third worker = (15-10)/(3-2) = 5
- APL of the third worker = 15/3 = 5
- Here, MPL is equal to APL. Therefore, APL is constant.
If the marginal product of labour is below the average product of labo...
When AVG product starts decline marginal product becomes decreasing
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