Why MP curves cut AP curve at maximum point?

It happens because when AP rises, MP is more than AP. When AP falls, MP is less than AP so, when AP is constant and at its maximum point MP is equal to AP. Therefore, MP curve cuts AP curve at its maximum point.

When MP AP then AP is?

Answer: When AP is rising it is always less than MP and when it is falling it is always greater than MP. MP = AP when AP is at its max. The law of diminishing returns states that as a firm uses more of a variable input without changing the quantity of fixed inputs, the MP of the variable input will eventually decline.

What is the shape of MP and AP curves?

All – TP, MP and AP curves, are inverted U-shaped.

What is the relation between AP and MP when AP is maximum?

As long as MP is higher than AP, AP increases. At the highest point of AP, i.e. when AP is at its maximum, MP is equal to AP. When MP becomes lesser than AP, AP also starts to fall. Thereafter, both AP and MP fall, but MP becomes negative and AP remains positive.

Can AP rise when MP starts declining?

Answer: Yes, AP can rise when MP starts declining. It can happen as long as falling MP is more than AP. However, when MP becomes equal to AP, further decline in MP will also reduce AP.

What happens when MP AP?

First, the relationship between AP and MP: I. If MP > AP, AP will rise as labour increases. II. If MP < AP, AP will decline as labour increases, and when MP = AP, then AP is at a maximum.

What is the relationship between MP and AP?

First, the relationship between AP and MP: If MP > AP, AP will rise as labour increases. II. If MP < AP, AP will decline as labour increases, and when MP = AP, then AP is at a maximum.

Why does AP continue to rise even when MP starts falling?

AP continue to rise while MP is falling because AP is the summation of AFC + AVC , falling in MP leads to fall in AVC but rise in AFC So due to rise in AFC , it doesn’t fall..

Why is tp maximum When MP is zero?

When the Marginal Product (MP) increases, the Total Product is also increasing at an increasing rate. This gives the Total product curve a convex shape in the beginning as variable factor inputs increase. When the MP becomes zero, Total Product reaches its maximum.

What happen TP when MP is zero?

When TP increases at an increasing rate, MP also increases at an increasing rate. b. When TP increases at decreasing rate, MP attains its maximum point and starts falling. When TP reaches its maximum point, MP becomes zero.