The relationship between Average (AP) product and Marginal product (MP) is as follows:
The relationship between MP and AP is as follows:
1. When MP > AP, this means that AP is rising. This is the care up to 4 units of labour in the above table.
2. When MP = AP, this means that AP is constant. This occurs in our example when 5 workers are employed.
3. When MP < AP, this means that AP is falling. This phase starts from 6th worker.
Diagrammatically, the relationship between the MP curve and the AP curve is as follows:
1. So long as the MP curve lies above the AP curve the AP curve is the positively sloping curve. This can be seen in the diagram before point A.
2. When the MP curve intersects AP curve, this is the maximum point on the AP curve, where AP is at maximum. This happens at point A in the diagram.
3. When the MP curve is below the AP curve, the AP curve slopes downwards. This happens after point A.
