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In the product schedule, average product peaks at 110 units when total product is 440 at 4 workers. What is true of the marginal product of the 4th worker at this peak?
AMP is greater than AP
BMP is less than AP
CMP is equal to AP
DMP has already turned negative
Answer & Solution
Correct answer: C. MP is equal to AP
1. When AP is at its maximum, the relationship rule states MP equals AP, since the MP curve cuts the AP curve at its highest point.
2. Verify: $AP_4 = \frac{440}{4} = 110$ and $MP_4 = 440 - 330 = 110$.
3. Both equal 110, so MP equals AP at the peak.
4. MP exceeds AP only while AP is rising and is below AP once AP falls; MP is still strongly positive, so the answer is MP equals AP.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 3 Unit I "Theory of Production", p.17_
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