Assume a snowboard company is at a point in production at which marginal product is below average product. Which of the following must be true?
A)Diminishing marginal product must have set in.
B)Marginal product must be falling.
C)Average product must be falling.
D)All of these are correct.

Question

Quizplus · Accepted Answer

When marginal product is below average product, it implies that adding more units of input is increasing output at a decreasing rate, which is a sign of diminishing marginal product. This also means the average product is falling because the addition of more units of input is not increasing output as efficiently as before.

Assume a Snowboard Company Is at a Point in Production