Wednesday, August 5, 2015

Total, Average & Marginal Product

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Total Product (TP):
Total product is the amount of output produced in physical units from the input of x1 if  x2 is assigned the fixed value of x2o.
Figure: Total product curve
Each curve gives the relationship between q & x1 for a different value of x2o.

Average product (AP):
Ap is the quantity of total output produced per unit of a variable input, holding all other inputs fixed. It is found by dividing total product by the quantity of the variable input.
AP = q/x1 = f (x1, x2o)/x1

Marginal Product (MP) :
MP is the change in the quantity of total product resulting from a unit change in a variable input, keeping all other inputs unchanged. It is found by dividing the change in total product by the change in the variable input.
MP = δq/δx1 = f1 (x1, x2o)


Source:
1. Class Note
2. Amosweb

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