Total product is maximum when :

Question

Accepted Answer

The correct option is 3:

The relationship between Total Product (TP) and Marginal Product (MP) is fundamental to the study of production in the short run, especially under the Law of Variable Proportions. Marginal Product is defined as the change in Total Product resulting from employing one additional unit of a variable factor (usually labor). As long as adding another unit of labor increases the total output (meaning MP is positive), TP will continue to rise. TP reaches its peak, or maximum level, precisely at the point where the contribution of the last unit of labor is exactly zero. Beyond this point, if more units of labor are added, the MP becomes negative, causing the Total Product to decline. Therefore, maximum Total Product is attained when the Marginal Product is zero.

The incorrect option is 1 (Marginal product is maximum): Total Product increases at an increasing rate until Marginal Product is maximum. After MP is maximum, TP continues to increase, but at a decreasing rate.

The incorrect option is 2 (Marginal product is equal to average product): Marginal Product equals Average Product (AP) at the point where the Average Product curve is at its maximum. At this point, the Total Product is still increasing, meaning it has not yet reached its maximum level.

The incorrect option is 4 (Marginal product begins to fall): Marginal Product begins to fall right after it reaches its maximum point (the point of inflection on the TP curve). When MP is falling but still positive, Total Product is increasing, meaning it has not reached its maximum yet.