The level of output at which the average product of a variable input is at a maximum corresponds to the level of output where short-run average total cost is at a minimum.

Question

Quizplus · Accepted Answer

The level of output at which the average product of a variable input is at a maximum does not necessarily correspond to the level of output where short-run average total cost is at a minimum. The average product of a variable input is maximized when the marginal product of the input is equal to the average product. In contrast, the short-run average total cost is at a minimum when marginal cost equals average total cost, which are based on different calculations and factors.

The Level of Output at Which the Average Product of a Variable