What is a total product?
Suppose we differentiate an input and keep all the other inputs unchanged, then for different degrees of that input we get different degrees of output. This association between the variable input and output, keeping all the other inputs unchanged is often referred to as total product (TP) of the variable input. This is also sometimes termed as the total return or total physical product of the variable input. It will be helpful to elucidate the concepts of average product (AP) and marginal product (MP). They are useful in order to explain the contribution of the variable inputs to the production procedure.
What is an average product?
Average product is explained as the output per unit of the variable input. We can calculate it as follows:
APL = TPL/L
What is a marginal product?
Marginal product of an input is explained as the change in the output per unit of change in the input when all the other inputs are held unchanged. When the capital is held unchanged, the marginal product of labour is as follows:
MPL = Change in output/Change in input
∆TPL/∆L
Since the inputs cannot take the negative values, the marginal product is unexplained at zero degree of the employment of input. For any degree of an input, the sum of marginal products of every foregoing unit of that input gives the total product. So, the total product is the sum of marginal products.
Total Product, Marginal Product, and Average Product
| Labour | TP | MPL | APL |
| 0 | 0 | – | – |
| 1 | 10 | 10 | 10 |
| 2 | 24 | 14 | 12 |
| 3 | 40 | 16 | 13.33 |
| 4 | 50 | 10 | 12.5 |
| 5 | 56 | 6 | 11.2 |
| 6 | 57 | 1 | 9.5 |
An average product of an input at any degree of employment is the aggregate of all the marginal products up to that degree. According to the variable inputs, the average and marginal products are often mentioned as the average and marginal returns.
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FAQs
The formulas to calculate these measurements are: for Average Product, Total Product divided by the units of input; for Marginal Product, the change in Total Product divided by the change in input.
What is the relationship between TP AP and MP? ›
The MP curve rises initially, it is zero when TP reaches a maximum, and it is negative thereafter. When the AP curve rises, the MP curve is above it; when the AP curve falls, the MP curve is below it; and when AP attains a maximum, MP = AP.
What is the relationship between average product and marginal product answer? ›
Relationship between Average Product and Marginal Product
When Average Product is rising, Marginal Product lies above Average Product. When Average Product is declining, Marginal Product lies below Average Product. At the maximum of Average Product, Marginal and Average Product equal each other.
What does it mean when marginal product is greater than average product? ›
If the value of marginal product exceeds the average product it means that the average product will increase. On the contrary if the value of marginal product is less than the average product it means that the average product will decline.
How to calculate total product? ›
Total Product is calculated by adding up all the output created over a set period. What does the Average Product represent in relation to Total Product and input units? Average Product is the Total Product divided by the number of units of an input.
How do I calculate marginal product? ›
The marginal product of labor is calculated by dividing the change in output divided by the change in labor, given that all else is equal. For example, if output increased by 20 and labor increased by 2, MPL = 20 / 2 = 10.
How to calculate TP from MP? ›
For any degree of an input, the sum of marginal products of every foregoing unit of that input gives the total product. So, the total product is the sum of marginal products.
What is the difference between MP and TP? ›
Total product TP is the total quantity of a commodity produced in a given period. Marginal product MP is additional quantity of the commodity produced by using an additional unit of a variable factor.
What happens to TP when MP increases? ›
When MP rises, TP rises at an increasing rate.
What is the relationship between total product and marginal product in economics? ›
Relationship between Total Product and Marginal Product
TP increases at an increasing rate when MP increases. This pattern provides a Total Product Curve with a shape of convex. It then continues till MP reaches the maximum point of TP. Where MP declines and stays positive, TP increases at a decreasing rate.
When the average cost declines, the marginal cost is less than the average cost. When the average cost increases, the marginal cost is greater than the average cost. When the average cost stays the same (is at a minimum or maximum), the marginal cost equals the average cost.
What is the formula for the average product? ›
It is defined as the output per unit of factor inputs or the average of the total product per unit of input and can be calculated by dividing the Total Product by the inputs (variable factors). Average Product = Total Product/ Units of Variable Factor Input.
What is the relationship between TP and AP? ›
Average Product refers to output per unit of a variable input. For example, if the total product is 30 kg of wheat produced by 5 labours(variable inputs), then the average product will be 30/5, i.e., 6 kg. AP is calculated by dividing TP by units of the variable factor.
What happens if marginal product is less than average product? ›
Where marginal product is below average product, average product falls. The marginal product curve intersects the average product curve at the maximum point on the average product curve.
At what point does marginal product equal to average product? ›
Marginal product equals average product at the maximum point of AVERAGE product. When MP is greater than AP, MP pulls AP up. AP is rising.
How to find TP from MP? ›
For any degree of an input, the sum of marginal products of every foregoing unit of that input gives the total product. So, the total product is the sum of marginal products.
How do you find total cost from marginal product? ›
Answer and Explanation: To calculate the total cost, add the sum of all marginal costs at each output level up to the point where costs need to be calculated to fixed costs. The sum of marginal costs up to an output level is equal to variable costs and when added to fixed cost, it shows total costs.
How is total product derived from marginal product? ›
How is Total Physical Product derived from Marginal Physical Product? Notes: Total Physical Product is derived from Marginal Physical Product by cumulative addition. Suppose we vary a single input and keep all other inputs constant. Then for different levels of that input, we get different levels of output.
What is the relationship between TPP MPP and app? ›
So APP = TPP/units of variable factor. For example in table 17.1 the TPP of 2 units of labour is 26, the APP will be 26 ÷ 2 = 13. In the same way we an calculate APP of all the units of a variable factor. We calculate MPP of 2 units labour by deducing TPP of 1 unit.
