1. What Happens to the Total Product Curve As Output (Production) Increases? It Rises At

1. What Happens to the Total Product Curve As Output (Production) Increases? It Rises At

1. What happens to the total product curve as output (production) increases? It rises at an increasing

rate, continues to rise but at a decreasing rate, levels off and then falls.

2. What happens to the marginal product curve as output increases? It rises and then falls.

3. What happens to the average product curve as output increases? It rises, levels off and then falls.

4. Where does the marginal product curve cross the average product curve? At the highest point on

the average product curve

5. Why do these curves look the way they do? Because of the law of diminishing marginal returns

6. What is the law of diminishing marginal returns? As successive amounts of a variable resource such

as labor are added to a fixed resource such as capital or land, at some point the marginal product

will decline.

7. Why is this concept important? It is important because in the production process, marginal cost

and eventually average cost will rise. If marginal cost continued to decline, we could feed the world

from a flower pot.

8. What is the relationship between marginal product and total product? Marginal product is the

slope of the total product curve.When total product is increasing at an increasing rate, marginal

product is rising. When total product is increasing at a decreasing rate, marginal product is positive

but falling. When total product is at its maximum, marginal product is zero.When total product

declines, marginal product is negative.

9. What is the relationship between marginal product and average product? When marginal product

exceeds average product, average product will rise.When marginal product is less than average

product, average product will fall. Therefore, marginal product intersects average product where

average product is at its maximum.

10. Where does marginal product cross average product? At the AP’s maximum

11. Where does marginal cost cross average variable cost? At the lowest point on the average

variable cost curve

12. Will this always be true? Why or why not? Yes. Anything else is mathematically impossible.

13. How does the law of diminishing marginal returns affect output (product) and costs? The law of

diminishing marginal returns says that the increase to total product (marginal product) will

decrease and the total cost curve will increase at an increasing rate (marginal costs will increase).