Question: When AP < MP, AP is:
Options:
Remains constant
Decreasing
Increasing
None of the above
✅ Explanation: In economics, AP (Average Product) is the total product divided by the quantity of input. MP (Marginal Product) is the change in total product when one additional unit of input is added.
When MP is greater than AP (MP > AP), it means that each additional unit of input is more productive than the average of all previous units. This additional productivity pulls the average up, causing AP to increase.
In simpler terms, if the new worker you hire produces more than your existing average output per worker, the overall average output will increase.
When MP is greater than AP (MP > AP), it means that each additional unit of input is more productive than the average of all previous units. This additional productivity pulls the average up, causing AP to increase.
In simpler terms, if the new worker you hire produces more than your existing average output per worker, the overall average output will increase.