The is at its peak. To the left

The graph shows that the highest point of the curve is the point of optimum population where per capita income is at its peak. To the left of this maximum point, the per capita income is reduced, implying that the country is under-populated as it is able increase population until it reaches the optimum level where resources are fully utilised. Therefore, a country is considered to be under-populated if an increase in the number of people in a country is met with an increase in per capita income. When the population is not large enough, there are not enough people to exploit all the available resources in the country with maximum efficiency, causing there to be reduced output and lower per capita income. To the right of the optimal point, there is also a reduction in per capita income, demonstrating that an increase in population above the maximum point leads to a decline in returns. This is due to there being too many people to work efficiently and produce maximum output and per capita income. Therefore, points above the highest point (M) is the stage of over-population where there is lower per capita income as a result.

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