Economics FROM 3
Chapter 4 PRODUCTION
CLASSIFICATION OF OUTPUTS- Total Product (T.P)
This is that output which is produced as more and more units of variable factors are added to a fixed factor. To obtain TP, we multiply average product by the number of workers.
Total Product=AP*Number of workers
- Average Product (A.P)
It is the total product divided by the number of workers or persons employed. That is, output per head. It is calculated as follows:
AP=Change in total productChange in number of workers
- Marginal Product (M.P)
This is the additional output got from the employment of additional person or more person. It is calculated as follows:
MP=(Change in TPChnge in the numb of workers)(Change in TPChange in the numb of wrkers)
Example: The following table shows total quantity of palm oil produced by a plantation.
|
Fixed Factor |
Variable Factor (labour) |
Total product (TP) |
Average product (AP) |
Marginal product (MP) |
|
1 |
1 |
80 |
80 |
80 |
|
1 |
2 |
120 |
60 |
40 |
|
1 |
3 |
400 |
133.3 |
280 |
|
1 |
4 |
500 |
125 |
100 |
|
1 |
5 |
500 |
100 |
0 |
|
1 |
6 |
480 |
80 |
-20 |