-Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?
A) Total product increases as more labor is hired.
B) The marginal product is equal to the average product.
C) The marginal product is positive.
D) The marginal product is greater than the average product.
E) The marginal product is less than the average product.

Question

-Under which of the following sets of circumstances is it definitely the case that the average product increases as more labor is hired?
A) Total product increases as more labor is hired. 
B) The marginal product is equal to the average product. 
C) The marginal product is positive. 
D) The marginal product is greater than the average product. 
E) The marginal product is less than the average product.

Quizplus · Accepted Answer

The average product increases when the marginal product (the output produced by the last unit of labor hired) is greater than the average product (the average output produced per unit of labor). This is because adding a unit of labor that has a higher output than the current average pulls the overall average up.

-Under Which of the Following Sets of Circumstances Is It