Total product average product and marginal product

Since this implies efficient utilization of the fixed factor, a firm always operates in the second stage of production.

marginal product formula

For example, suppose that Table represents a production system in which Y is a capital resource and X represents labor input. It will be seen that in the beginning total product curve rises at an increasing rate, that is, the slope of the TP curve is rising in the beginning.

Graphical relationship between total product average product and marginal product

The slope of a line from the origin to any point on the total product curve measures the average product of Xat that point, whereas the slope of the total product curve equals the marginal product. The efficiency of the fixed factor is also affected in case of overcrowding of variable factor. Marginal Product: Marginal product of a factor is the addition to the total production by the employment of an extra unit of a factor. This expression assumes that the quantity of the other input, Y, remains unchanged. The marginal product of a factor, MPX, is the change in output associated with a oneunit change in the factor input, holding all other inputs constant. Graphically the total product curve is shown by TP curve in Fig. After 8 units of employment of labour total output declines with further increase in labour input.

The slope of a line from the origin to any point on the total product curve measures the average product of Xat that point, whereas the slope of the total product curve equals the marginal product. Marginal product of 8th unit of labour is zero and beyond that it becomes negative.

Relationship between average product and marginal product with diagram

The slopes of successive lines drawn from the origin to the total product curve increase until point B, after which their slopes decline. Each has a corresponding location on the average or marginal curves. The marginal product of a factor, MPX, is the change in output associated with a oneunit change in the factor input, holding all other inputs constant. This is a short-run concept. The law of diminishing returns to a factor states that as the variable factor is allowed to vary increase , keeping all other factors constant, the Marginal Product first increases, reaches its maximum and then declines and even becomes negative. After a point total product curve starts rising at a diminishing rate as the employment of the variable factor is increased. After the maximum, TP starts to fall or it declines. As shall be seen from Table The relationship between average product and marginal product and how both of them are related to the total product will be explained in detail in our analysis of the law of variable proportions.

It is synonymous with Qin Equation. Too many labourers may cause chaos and wear and tear of machinery, which ultimately causes TP to fall.

explain the relationship among average product marginal product and total product

In this phase, MP is declining but note that it still remains positive. This continues to the point where the MP curve reaches its maximum.

Average product of labor

The efficiency of the fixed factor is also affected in case of overcrowding of variable factor. As shall be seen from Table This continues to the point where the MP curve reaches its maximum. Now, if instead of two workers, three workers are employed and as a result total product increases to quintals, then the third worker has added quintals of wheat to the total production. For example, suppose that Table represents a production system in which Y is a capital resource and X represents labor input. One would, of course, obtain other total product functions for X if the factor Y were fixed at levels other than two units. It is synonymous with Qin Equation. For example, in Fig. In the long run, as we know that all factors become variable, the firm can increase its total product by increasing any of its factors as all factors become variable. When the MP is declining and negative, the Total Product declines. The optimization process entails an analysis of the relation between the total and marginal values of a function. Share with friends. If more and more labour is added to fixed capital say, machinery , the marginal contribution of each variable factor becomes less, leading to overcrowding.

Therefore, it is useful to introduce the concepts of total, average, and marginal products for the resources employed in a production system. The slopes of successive lines drawn from the origin to the total product curve increase until point B, after which their slopes decline.

average product definition
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Total Product, Average Product and Marginal Product: Formulae, Examples