|Posted on April 16, 2014 at 8:15 PM|
The marginal product and average product curves initially increase then decrease due to the law of diminishing marginal returns.
Marginal product is the change in total product divided by the change in quantity of resources (or inputs).
Average product is the total product divided by the quantity of economic resources (or inputs).
The average product reaches its peak when it intersects the marginal product curve.
See the curves in the No Bull Review graph below.
AP Microeconomics Unit 2 Product Markets