Production - Production in the short run - Total, marginal and average products
3 important questions on Production - Production in the short run - Total, marginal and average products
Short-run production functions are often referred to as total product curves:
A curve showing the amount of output as a function of the amount of variable output.
Decisions about running an enterprise most naturally arise in the form of decision about changes, so here lies the importance of the marginal product:
= the change in total product due to a unit change in the variable input, defined as MPl = dQ/dL. Geometrically, the marginal product at any point is simply the slope of the total product curve at that point.
The average product of a variable input, also called labour productivity, is defined as:
The total output divided by the quantity of the variable input; APl = Q/L. Geometrically, the average product is the slope of the line joining the origin to the corresponding point on the total curve.
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