Consider the relationship between average product and marginal product, and then choose the correct statement. A. When marginal product exceeds average product, average product is rising. B. When marginal product is falling, average product is falling. C. When average product exceeds marginal product, marginal product is rising. D. When average product is rising, marginal product is rising.

Answer: The correct answer is "A. When marginal product exceeds average product, average product is rising.".

Explanation: The average productivity is the result of dividing the amount of product obtained by the number of units of any of the production factors used. Marginal productivity measures what adds to the employment the use of one more unit of the corresponding production factor.

At first, the average and marginal productivity will grow as we use more units of the corresponding factor. Marginal productivity will be above average, which is precisely what will increase average productivity. The average grows because the production added by the successive additional units of the corresponding factor, ultimately the marginal productivity, is above the average. There will come a time when marginal productivity will begin to decline as we use more units of the corresponding factor. However, average productivity will continue to grow while marginal productivity is higher, although marginal productivity is declining. The average productivity will reach its maximum when it is the same as the marginal productivity. From that moment, when the marginal productivity is lower than the average productivity, the average productivity will begin to decline.