<P> Thus if the marginal product of labor is rising then marginal costs will be falling and if the marginal product of labor is falling marginal costs will be rising (assuming a constant wage rate). </P> <P> The average product of labor is the total product of labor divided by the number of units of labor employed, or Q / L. The average product of labor is a common measure of labor productivity . The AP curve is shaped like an inverted "u". At low production levels the AP tends to increase as additional labor is added . The primary reason for the increase is specialization and division of labor . At the point the AP reaches its maximum value AP equals the MP . Beyond this point the AP falls . </P> <P> During the early stages of production MP is greater than AP . When the MP is above the AP the AP will increase . Eventually the MP reaches it maximum value at the point of diminishing returns . Beyond this point MP will decrease . However, at the point of diminishing returns the MP is still above the AP and AP will continue to increase until MP equals AP . When MP is below AP, AP will decrease . </P> <P> Graphically, the AP curve can be derived from the total product curve by drawing secants from the origin that intersect (cut) the total product curve . The slope of the secant line equals the average product of labor, where the slope = dQ / dL . The slope of the curve at each intersection marks a point on the average product curve . The slope increases until the line reaches a point of tangency with the total product curve . This point marks the maximum average product of labor . It also marks the point where MP (which is the slope of the total product curve) equals the AP (the slope of the secant). Beyond this point the slope of the secants become progressively smaller as AP declines . The MP curve intersects the AP curve from above at the maximum point of the AP curve . Thereafter, the MP curve is below the AP curve . </P>

At what output is marginal product of labour the highest