All of the following are true about Total Product, Marginal product and Average product except...
All of the following are true about Total Product, Marginal product and Average product except one:
- A) When TP is the maximum, MP equals zero
- B) AP equals MP when MP is at the Maximum
- C) When TP is falling, MP is negative
- D) When TP is at the maximum, AP is positive
Correct Answer: B) AP equals MP when MP is at the Maximum
Explanation
This Economics question is about Total Product (TP), Marginal Product (MP), and Average Product (AP). The question asks you to identify which statement among the options is not true about TP, MP, and AP.
Option A states that when TP is at its maximum, MP equals zero. This is true because MP is the additional output produced when one more unit of input is added, and when TP is at its maximum, it means that the input added is no longer increasing the output, hence MP equals zero.
Option B states that AP equals MP when MP is at the maximum. This statement is incorrect because when MP is at its maximum, AP is neither at its maximum nor equal to MP. AP is the total output divided by the total input, while MP is the additional output when a unit of input is added.
Option C states that when TP is falling, MP is negative. This is true because when TP is falling, it means that the additional input is causing a decrease in output, hence MP is negative.
Option D states that when TP is at the maximum, AP is positive. This is true because AP is the total output divided by the total input, hence if TP is at its maximum, it means that the output is greater than the input, hence AP is positive.
Therefore, the correct answer is Option B, which states that AP equals MP when MP is at the maximum. This statement is incorrect because when MP is at its maximum, AP is neither at its maximum nor equal to MP.