Question
Can AP rise when MP starts declining?

Answer

Yes, AP can rise when MP starts declining. It can happen as long as falling MP is more than AP. However, when MP becomes equal to AP, further decline in MP will also reduce AP.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Similar questions

If a good can be used for many purposes, the demand for it will be elastic. Why?
Distinguish between balance of trade and balance on current account.
Explain the chain of effects of 'increase' in demand of a good.
The feature ‘large number of sellers’ under perfect competition.
Show the determination of equilibrium price with the help of schedule.
What is the relation between good X and good Y in each case, if with fall in the price of X demand for good Y (i) rises and (ii) falls? Give reason.
A consumer consumes only two goods X and Y. At a certain consumption level of these goods, he finds that the ratio of marginal utility to price in case of X is lower than that in case of Y. Explain the reaction of the consumer.

OR

By spending his entire income only on two goods X and Y a consumer finds that, $\frac{\text{MU}_\text{x}}{\text{P}_\text{x}}<\frac{\text{MU}_\text{y}}{\text{P}_\text{y}}$Explain how will the consumer react.

OR

A consumer consumes only two goods X and Y and is in equilibrium. Show that when the price of good X rises, the consumer buys less of good X. ASVG Use utility analysis.

The demand for a good doubles due to a 25 percent fall in price. Calculate its price elasticity of demand.
Give reasons for the following statements:
  1. A decrease in supply will not result in a change in equilibrium quantity if the demand for a commodity is perfectly inelastic.
  2. An decrease in supply will not result in a change in equilibrium price if the demand for a commodity is perfectly elastic.
Giving reason explain how the following should be treated in estimation of national income:
  1. Payment of interest by a firm to a bank.
  2. Payment of interest by a bank to an individual.
  3. Payment of interest by an individual to a bank.