ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Due to the inverse relationship between marginal cost and product, marginal product will always be at its maximum level just as marginal cost reaches its minimum point. The opposite is also true, where marginal product is at its minimum level as marginal cost reaches the maximum level.

Detailed explanation-2: -There is an inverse relationship between marginal cost and marginal product. In the beginning, when the marginal product is increasing, the marginal cost is decreasing. When the marginal product reaches its highest point, then marginal cost reaches its lowest point.

Detailed explanation-3: -At which point is marginal product (MP) at its maximum? the vertical distance between ATC and AVC.

Detailed explanation-4: -When marginal product is decreasing, marginal cost is increasing. Since the marginal cost curve, above the minimum average variable cost, is the firm supply curve, when the law of diminishing marginal returns is in effect, the firm’s supply curve will be upward sloping.