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How is MPP derived from TPP
- a)Cumulative subtraction
- b)Cumulative division
- c)Cumulative addition
- d)Cumulative product
Correct answer is option 'A'. Can you explain this answer?
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How is MPP derived from TPPa)Cumulative subtractionb)Cumulative divisi...
Total physical product (TPP) -- Quantity of output (Y) that is produced from a firm's fixed inputs and a specified level of variable inputs (X).
Marginal physical product (MPP) is the change in the level of output due to a change in the level of variable input; restated, the MPP is the change in TPP for each unit of change in quantity of variable input.
MPP = (TPP2 - TPP1)/(X2 - X1)
Marginal physical product (MPP) is the change in the level of output due to a change in the level of variable input; restated, the MPP is the change in TPP for each unit of change in quantity of variable input.
MPP = (TPP2 - TPP1)/(X2 - X1)
Most Upvoted Answer
How is MPP derived from TPPa)Cumulative subtractionb)Cumulative divisi...
Derivation of MPP from TPP
The Marginal Physical Product (MPP) is derived from the Total Physical Product (TPP) through the process of cumulative subtraction. The MPP represents the change in TPP that results from increasing the input by one unit.
Understanding TPP and MPP
- Total Physical Product (TPP): TPP is the total output or production that is obtained from a given amount of input. It represents the relationship between the quantity of input used and the quantity of output obtained.
- Marginal Physical Product (MPP): MPP is the additional output that is obtained from using one more unit of input, while keeping other inputs constant. It measures the rate of change in TPP when the input is increased by one unit.
Derivation Process
To derive MPP from TPP, we follow the process of cumulative subtraction. This involves calculating the difference in TPP for successive units of input. Here's how it is done:
1. Calculate the TPP for each level of input:
- Start by determining the TPP for the initial level of input. This is the total output obtained when the input is at its lowest level.
- Next, increase the input by one unit and calculate the TPP for this new level. Repeat this process for each successive unit of input.
2. Calculate the difference in TPP between successive units of input:
- To derive the MPP, we need to calculate the change in TPP resulting from each additional unit of input.
- For each unit of input, subtract the TPP of the previous unit from the TPP of the current unit. This will give us the additional output obtained from using one more unit of input.
3. Interpretation:
- The differences calculated in the previous step represent the MPP for each unit of input.
- The MPP indicates the additional output that can be obtained by increasing the input by one unit, while other inputs remain constant.
- It shows how much the TPP increases or decreases as a result of adding one more unit of input.
Example:
Let's consider an example to illustrate the derivation of MPP from TPP:
Input (Units) | TPP (Output)
------------------------
1 | 10
2 | 18
3 | 24
4 | 28
5 | 30
MPP (Output) = TPP (current unit) - TPP (previous unit)
MPP for unit 1 = 10 - 0 = 10
MPP for unit 2 = 18 - 10 = 8
MPP for unit 3 = 24 - 18 = 6
MPP for unit 4 = 28 - 24 = 4
MPP for unit 5 = 30 - 28 = 2
In this example, the MPP represents the additional output obtained from using one more unit of input. As the input increases, the MPP decreases, indicating diminishing returns to the input.
Therefore, by following the process of cumulative subtraction, we can derive the Marginal Physical Product (MPP) from the Total Physical Product (TPP).
The Marginal Physical Product (MPP) is derived from the Total Physical Product (TPP) through the process of cumulative subtraction. The MPP represents the change in TPP that results from increasing the input by one unit.
Understanding TPP and MPP
- Total Physical Product (TPP): TPP is the total output or production that is obtained from a given amount of input. It represents the relationship between the quantity of input used and the quantity of output obtained.
- Marginal Physical Product (MPP): MPP is the additional output that is obtained from using one more unit of input, while keeping other inputs constant. It measures the rate of change in TPP when the input is increased by one unit.
Derivation Process
To derive MPP from TPP, we follow the process of cumulative subtraction. This involves calculating the difference in TPP for successive units of input. Here's how it is done:
1. Calculate the TPP for each level of input:
- Start by determining the TPP for the initial level of input. This is the total output obtained when the input is at its lowest level.
- Next, increase the input by one unit and calculate the TPP for this new level. Repeat this process for each successive unit of input.
2. Calculate the difference in TPP between successive units of input:
- To derive the MPP, we need to calculate the change in TPP resulting from each additional unit of input.
- For each unit of input, subtract the TPP of the previous unit from the TPP of the current unit. This will give us the additional output obtained from using one more unit of input.
3. Interpretation:
- The differences calculated in the previous step represent the MPP for each unit of input.
- The MPP indicates the additional output that can be obtained by increasing the input by one unit, while other inputs remain constant.
- It shows how much the TPP increases or decreases as a result of adding one more unit of input.
Example:
Let's consider an example to illustrate the derivation of MPP from TPP:
Input (Units) | TPP (Output)
------------------------
1 | 10
2 | 18
3 | 24
4 | 28
5 | 30
MPP (Output) = TPP (current unit) - TPP (previous unit)
MPP for unit 1 = 10 - 0 = 10
MPP for unit 2 = 18 - 10 = 8
MPP for unit 3 = 24 - 18 = 6
MPP for unit 4 = 28 - 24 = 4
MPP for unit 5 = 30 - 28 = 2
In this example, the MPP represents the additional output obtained from using one more unit of input. As the input increases, the MPP decreases, indicating diminishing returns to the input.
Therefore, by following the process of cumulative subtraction, we can derive the Marginal Physical Product (MPP) from the Total Physical Product (TPP).
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How is MPP derived from TPPa)Cumulative subtractionb)Cumulative divisionc)Cumulative additiond)Cumulative productCorrect answer is option 'A'. Can you explain this answer?
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