Identify the correct statements from the following:

(A) As long as MP>AP, the average Product (AP) can rise even when the Marginal Product (MP) is falling.

(B) The law of variable proportions operates only if the factor ratio happens to change.

(C) Total Product (TP) must increase no matter if there are increasing or decreasing returns to a factor.

(D) Marginal Product (MP) = Average Product (AP), when AP is maximum.

Choose the correct answer from the options given below:

Option 3: (A), (B), (C) and (D) -> Let me analyze each statement:

(A) TRUE: When MP > AP, the Average Product rises even if Marginal Product is falling. This is because as long as the marginal (additional) output exceeds the average, it pulls the average upward. Think of it like test scores - if your new score (MP) is higher than your average (AP), your average increases even if your new score is lower than your previous score.

(B) TRUE: The law of variable proportions (law of diminishing returns) operates specifically when one input is varied while others remain fixed. This changes the factor ratio (proportion of inputs). If all factors changed proportionally, we'd be examining returns to scale instead.

(C) TRUE: Total Product increases whether experiencing increasing returns (MP rising, TP increasing at increasing rate) or decreasing returns (MP falling but positive, TP increasing at decreasing rate). TP only decreases when MP becomes negative, which represents a stage beyond normal diminishing returns where adding more variable input actually reduces total output.

(D) TRUE: MP = AP at the maximum point of AP. This is a fundamental mathematical relationship: when MP > AP, average is pulled up; when MP < AP, average is pulled down. Therefore, AP reaches its peak exactly where MP intersects it.

Since all four statements (A, B, C, and D) are correct -> correct