A straight line drawn from the origin is tangent to a short-run production function with only one input,labor.At the quantity of labor where the tangency occurs:
A) the average product of labor is at a maximum.
B) the marginal product of labor is at a maximum.
C) the marginal product of labor is increasing.
D) the average product of labor is increasing.
E) the total product of labor is at a maximum.

Question

Quizplus · Accepted Answer

When a straight line drawn from the origin is tangent to a short-run production function at a point, it indicates that at that quantity of labor, the slope of the tangent (which represents the marginal product of labor) is equal to the slope of the line from the origin to the tangency point (which represents the average product of labor). This condition signifies that the average product of labor is at its maximum because the marginal product equals the average product at the maximum point of the average product curve.

A Straight Line Drawn from the Origin Is Tangent to a Short-Run