Explain and show relationship among total physical product, average physical product and marginal physical product.
Explain and show the relationship among total physical product, average physical product, and marginal physical product.
Total Product. It is the total quantity of output which is produced by the combination of the factor of production. e.g. if a firm produces 100 chairs per week. It will be the total product of that firm.
Average physical product: Total Product divided by units of variable factor determines the average product. If 10 labor produces 100 chairs per week. The average physical product of labor will be 100/10 =10 chairs.
Marginal Physical product. A change in the total product which is brought about by an additional unit of variable factor employed in the production process is called marginal physical product e.g 10 labor in a firm produces 100 chairs per week and if 11 labor is employed, the total output of chairs goes up 110. Thus T. output increases by 10 chairs on the employment of 11th labor. So the M.P.P of 11th labor is 10 chair.
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Relationship between Marginal Products (M.P) and Total Products (T.P).
1. M.P shows the rate of change of total quantity.
2. When M.P increases it means the T.P increases at increasing rate, showing in Ist stage
3. When T.P increases, M.P is positive in 2nd stage
4. When T.P is maximum, M.P is 0 at point B&K
5. When T.P falls, M.P is negative.
Relationship between Average Products (A.P) and Marginal Products (M.P).
1. When A.P is increasing M.P is greater then A.P in Ist stage of production.
2. When A.P is decreasing M.P is less then A.P in 2nd stage of production.
3. When A.P is neither increasing nor decreasing M.P is equal to A.P at point C
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