Realtion TP,AP And MP - B Com PDF Download

Marginal Product - In economics and in particular neoclassical economics, the marginal product or marginal physical product of an input (factor of production) is the change in output resulting from employing one more unit of a particular input (for instance, the change in output when a firm's labor is increased from five to six units)

Average Product - The quantity of total output produced per unit of a variable input, holding all other inputs fixed. Average product, usually abbreviated AP, is found by dividing total product by the quantity of the variable input. ... Average product is the per unit production of a firm.

Total Product - Total product is the overall quantity of output that a firm produces, usually specified in relation to a variable input. Total product is the starting point for the analysis of short-run production. It indicates how much output a firm can produce according to the law of diminishing marginal returns.

Relation Between TP/MP And AP/MP Curves

1) Relation between Total product(TP) and Marginal Product(MP)
We will explain the relation between TP and MP by the below graph:

1) So long as  MP is increasing , TP is increasing at increasing rate.
MP is rising till point ‘b’ in the second graph and so is TP is increasing at increasing rate till point ‘a’ in the first graph.
2) When MP starts dimnishing , TP increases only at a dimnishing rate.
MP starts dimnishing after point ‘b’till point ‘e’.
TP is increasing after point ‘a’ but at a dimnishing rate till point ‘f’(due to falling MP).

3) When MP = 0, there is no addition to TP

At point ‘e’, MP is zero and TP is maximum at point ‘f’.

4) When MP is neagtive , TP starts declining
After point ‘e’ MP becomes negative and TP after point ‘f’ starts falling.

We can conclude the above observation in other way round also:

a) When TP increases at an increasing rate, MP increases.

b) When TP increases at dimnishing rate, MP declines

c) When TP is maximum, MP is Zero

d) When TP begins to decline, MP becomes negative

2) Relation between Average product(AP) and Marginal Product(MP)

1) So long as MP curve lies above AP curve, the AP curve is positively sloping curve i.e. AP is rising.
This can be seen in the above digram before point ‘d’.

2) When MP curve intersects AP curve, this is the maximum point on the AP curve, where AP is at maximum.
This happens at point ‘d’

3) When MP curve lis below the AP curve, the AP curve slopes downward, i.e AP is declining.
This happens after point ‘d’

We can conclude the above observation in other way round also:

a) When MP > AP, this means that AP is rising

b) When MP = AP, this means that AP is maximum

c) When MP < AP, this means that AP is falling