Explain TP, MP and AP with the example. (2024)

FAQs

What is the concept of TP MP and AP? ›

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. Average product AP is the output per unit of the variable factor.

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.

Total product is the total amount produced per a set of resources, average product is the average cost per unit produced per set of resources, and marginal product is the cost for the very next unit to be produced in resources.

Stage II. This stage is called the stage of diminishing returns to a factor. It refers to the phase where TP increases at a diminishing rate and reaches its maximum. In this phase, MP is declining but note that it still remains positive.

The relationship between AP and MP can be explained with the help of the following diagram:In the diagram: i The AP increases when MP is greater than AP. ii The AP is at its maximum when both MP and AP are equal. This is shown at point E. iii The AP decreases when MP ip less than AP.

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.

MP becomes negative when TP falls. Also read: Total Product Average Product and Marginal Product.

MP is the rate of TP (i.e., it measures the change in TP). When MP=0, there is no change (or addition) in TP. Implying that TP should be maximum when MP=0.

When MP (Marginal Product) is constant, TP (Total Product) increases at a constant rate.

Let TP = Total Product, AP = Average Product and MP = Marginal Product.

How to find MP in economics? ›

How do you calculate marginal product of labor and capital? 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.

Average product is the ratio of units produced compared with units required to produce the products. To simplify, take an example of a company producing 100 products with 10 workers/labourers; labour is a variable of input, then the average product is 10.

Relationship between TP and MP of an input is as follows: i When MP increases TP increases at an increasing rate. ii When MP decreases TP increases at a diminishing rate. iii When MP is constant TP increases at a constant rate. iv When MP is zero TP is maximum.

As long as AP is rising, MP is greater than AP. This happens because the average can rise only if the marginal increase in greater than the average itself.

Yes, AP can rise when MP starts declining. It can happen as long as falling MP is more than AP. However, when MP becomes equal to AP, then further decline in MP will also reduce the AP.

The relationship between TPP and MPP can be explained as given below: (i) As long as MPP increases, TPP increases at an increasing rate. (ii) When MPP falls but remains positive, TPP increases but at a diminishing rate. (iii) When MPP becomes zero, TPP is maximum.

Point of inflexion is the point where the slope of the TP curve reaches the maximum and starts decreasing. At this point, MP is maximum.

Economics courses are often broken up into two categories: Microeconomics, which focuses on individuals, businesses, and markets, and Macroeconomics, which examines the economy as a whole and deals with issues affecting the entire nation or region.

Answer and Explanation:

With an increasing average product of labor the marginal product of labor also increases. When AP of labor reaches its maximum, the point where unit per labor is maximum, it equals to the marginal product of labor. After that point, AP of labor diminishes.