Question

3 how do average physical production (APP} and marginal physical product (MPP) differ?can APP be rising while MPP is falling? why?

Answer 1

Average product refers to output per unit of variable input.

AP = Total product/ units of variable factor. and marginal product is addition to total product when one or more units of variable factor is employed it is also known as marginal physical product. Hence MP = change in TP / change in variable input.According to the law of diminishing returns when more and more units of variable factors are employed with a fixed factor then marginal product of variable factor falls . Difference between AP and Mp are AP is calculated on the basis of all variable units where MP is calculated on additional units.AP can be zero but not negative as total product cannot be negative MP can be zero and negative as marginal product can be zero.It is MP which pulls AP up and down .Solution2 ,Yes Ap can rise when MP start declining it can happen as long as falling Mp is more than AP when MP becomes equal to AP decline in Mp also reduces Ap, the reasons are for rise in Ap when no is falling are of economies of large scale production which are due to internal economies as benefit of large scale production is available to the firm for use of large and bigger machines and specialisation of labour and rise in the demand for the entire industry.