Increase in Variable Input and its Effect on Average and Marginal Product

When there is an increase in variable input, it affects the average and marginal product. The average product (AP) and marginal product (MP) are two important concepts in production analysis that help in understanding the relationship between inputs and outputs.

Increase in Variable Input and Average Product

When there is an increase in the variable input, the average product (AP) increases. This is because the additional input contributes to the total output, which, in turn, increases the average product. The formula for calculating the average product is:

Average Product (AP) = Total Output / Total Input

Increase in Variable Input and Marginal Product

When there is an increase in the variable input, the marginal product (MP) also increases initially. This is because the additional input contributes to the total output, which increases the marginal product. However, after a certain point, the marginal product starts to decrease. This is because the law of diminishing returns sets in, and the additional input starts to have a diminishing effect on output.

The formula for calculating the marginal product is:

Marginal Product (MP) = Change in Total Output / Change in Total Input

Conclusion

When there is an increase in the variable input, the average product increases, and the marginal product also increases initially but later starts to decrease due to the law of diminishing returns. Therefore, the correct answer to the question is that the marginal product is more than the average product when there is an increase in variable input.