why does average product continue to rise even if marginal product falls
Dear Student,
The following conditions must be kept in mind while analysing marginal and average product curves;
1.If the marginal product is less than the average product, then the average product declines.
2. If the marginal product is greater than the average product, the average product rises.
3. If the marginal product is equal to the average product, the average product is maximum and constant.
With the effect of the diminshing marginal returns, marginal product falls. However, initially average product continues to rise even though marginal product is falling because marginal product is stll greater than the average product. After the marginal product goes on decresing till the point it is equal to average product and then falls below the average product, that is when average product starts falling.
Regards
The following conditions must be kept in mind while analysing marginal and average product curves;
1.If the marginal product is less than the average product, then the average product declines.
2. If the marginal product is greater than the average product, the average product rises.
3. If the marginal product is equal to the average product, the average product is maximum and constant.
With the effect of the diminshing marginal returns, marginal product falls. However, initially average product continues to rise even though marginal product is falling because marginal product is stll greater than the average product. After the marginal product goes on decresing till the point it is equal to average product and then falls below the average product, that is when average product starts falling.
Regards