FIGURE 7-1
-Refer to Figure 7-1.The marginal product of labour curve intersects the average product of labour curve when
A)the firm is at its capacity.
B)the firm achieves increasing returns.
C)average product is at its maximum.
D)diminishing returns sets in.
E)total product is at its maximum.

Question

FIGURE 7-1
-Refer to Figure 7-1.The marginal product of labour curve intersects the average product of labour curve when
A)the firm is at its capacity. 
B)the firm achieves increasing returns. 
C)average product is at its maximum. 
D)diminishing returns sets in. 
E)total product is at its maximum.

Quizplus · Accepted Answer

The marginal product of labour curve intersects the average product of labour curve at its maximum point. This occurs when the firm is operating at its most efficient level, where each additional unit of labour (or input) is adding the most amount of output (or product) on average. This point represents the peak of the firm's production possibility frontier, and is where the average product of labour is highest. Therefore, choice C is the correct answer.

FIGURE 7-1 -Refer to Figure 7-1.The Marginal Product of Labour Curve Intersects