Show Product or output refers to the volume of goods produced by a firm or an industry during a specified period of time. The concept of product can be considered from three different angles – Total Product, Marginal Product, Average Product. TOTAL PRODUCT (TP) Total Product (TP) refers to the total quantity of goods produced by a firm during a given period of time with the given number of inputs. EXAMPLE: If 10 labourers produce 60 kg of rice, then the TP is 60 kg. In the short run a firm can expand TP by increasing only the variable factors. However, in the long run, TP can be raised by increasing both fixed and variable factors. TP is also known as ‘Total Physical Product (TPP)’ or ‘Total Return’ or ‘Total Output’. MARGINAL PRODUCT (MP) Marginal Product (MP) refers to the addition to TP, when one more unit variable factor is employed. MP can be written as, MPn = TPn – TPn-1 Where, EXAMPLE: If 10 labourers make 60 kg of rice and 11 labourers make 67 kg of rice, then MP of the 11th labour will be MP11 = TP11 – TP10 MP11 = 67-60 = 7 kg MP is the change in TP when one more unit of variable factor is employed. However, when change in variable factor is greater than one unit, then MP can be calculated as, MP = Change in TP/ Change in units of Variable Factor MP = ΔTP/ΔN EXAMPLE: Suppose 2 labourers produce 60 units and 5 labourers produce 90 units, then MP will be, MP = 90-60/5-2 = 30/3 = 10 units AVERAGE PRODUCT (AP) Average product (AP) refers to output per unit variable input. For example, if TP is 60 kg of rice, produced by 10 labourers (variable input), then AP will be 60/10 = 6 kg. AP is obtained by dividing TP by number of units of variable output. AP can be written as, AP = TP/Units of variable factor (n) RELATIONSHIP BETWEEN TP AP AND MPThe relationship between TP and MP is explained through the Law of Variable Proportions. As long as the the TP increases at an increasing rate, the MP also increases. This goes on till MP reaches maximum. When TP increases at a diminishing rate, MP declines. This continues till the point where TP is at its highest. When TP reaches its maximum point, MP becomes zero. This concept can be explained with the help of the following schedule and diagram: RELATIONSHIP BETWEEN TP AP AND MPThe above table shows fixed factor of production i.e. land and variable factor of production i.e. labor. The total product initially increases and marginal product decreases. But after applying 6 units of labor on the fixed factor land, it becomes maximum i.e. 15. Here the Marginal Product is zero. As 8 units of variable factor are applied with fixed factor land, the total product decreases and marginal product becomes negative. RELATIONSHIP BETWEEN TP AP AND MPThe diagram or curve shows three stages of production which are as follows:
CONCLUSIONTo conclude, the following findings are found:
What is relationship between TP and MP explain with diagram?The relationship between TP and MP is explained through the Law of Variable Proportions. As long as the the TP increases at an increasing rate, the MP also increases. This goes on till MP reaches maximum. When TP increases at a diminishing rate, MP declines.
What is the relationship between TP and AP?Relationship between TP and AP
When TP rises at a decreasing rate and reaches its maximum point, AP falls. When TP starts falling at increasing rate, AP also falls but at diminishing rate. TP can be ascertained from AP by multiplying units of output with AP.
What is the relation of TP with MP in different stages of the operation?In the phase I, TPP increasesat an increasing rate and MPP rises. In phase II, TPP increases at decreasing rate and MPP falls but remains positive. In phase III, TPP starts falling and MPP becomes negative.
What is the relationship between Marginal Product and total product?The total product of a business represents the sum total of what it produces, while the marginal product represents additional output stemming from the increase of a single input. As a general rule: When total output is low, increasing input will yield a positive marginal product.
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