Shapes of Total Product Marginal Product and Average Product Curves

Total Products, Marginal Products, And Average Products

Total product, marginal product, and average product are used to analyze and examine the relationship between outputs and inputs in the production process. It is important to understand how changing inputs change the product output; so, the concepts of total, marginal, and average products are used to understand the relationship between inputs and outputs.

Total Product (TP)

TP means the total quantity of output generated by a firm or an entity during a given period. TP represents the sum total of all individual output units produced by utilizing various combinations of inputs, such as capital, labor, and raw materials. The total product increases with increasing units of input utilized, only up to a certain point which is known as the point of diminishing returns.

Marginal Product (MP)

MP is the additional output produced by inserting one more unit of a particular input while keeping every other input constant. It measures the variation in the total product due to a change in the quantity of a single unit of input. MP can be calculated by taking the difference when an additional unit of input is used and the total product when one less unit of input is used and then taking the difference between these two processes.

Average Product (AP)

AP is the total product produced using per unit of input. AP is calculated by dividing the measured total product by the total quantity of input used to produce the obtained output. The average product offers an idea of how the productivity of each unit of input is turning into the final product. The rising average indicates more productivity for each additional unit. Conversely, the falling average product suggests less productivity for each additional unit of input.

These concepts of TP, MP, and AP are important for firms and economists. They help in making decisions about resource allocation, analyzing the efficiency of production processes, and understanding the relationship between outputs and inputs.

The Shape of the Total Product Curve

The shape of the total product (TP) curve usually has three stages: the increasing returns stage, the diminishing returns stage, and the negative returns stage.

Increasing Returns Stage

In the initial phase, the total product increases at an increasing rate as more units of the variable input (e.g., raw material) are added while keeping other inputs held constant, the characteristics of this stage are economies of scale and efficient utilization of resources. The TP curve shows a steep upward slope in this stage.

Diminishing Returns Stage

The rate of productivity comes down after a stage of increasing returns. However, the production of new units goes on increasing but at a slower rate. This second stage is called the law of diminishing returns. The inclusion of more units raises the total product to rise continually but at a decreasing rate. The TP curve is still sloping upward but at a flatter angle at this stage.

Negative Returns Stage

Beyond a certain point in the production process addition of more units of the variable input does not increase the output. Instead, this leads to a decline in the total product. This stage is called the stage of dis-economies of scale or the negative returns stage. It occurs when the provided inputs become overburdened or the management and coordination of the production process become challenging. The TP curve begins a downward slope during this stage.

The Shape of the Marginal Product Curve

The MP curve is quite similar to the TP curve. In fact, the MP curve is obtained from the TP curve and it reflects the change in the total product that occurs from adding an additional unit of the variable input keeping all other variables constant.

The shape of the MP curve is as follows:

Initially, the MP curve remains upward-sloping until it reaches its maximum. After this point, the TP curve starts to diminish. This happens because additional units of the input added in the early stages of production tend to increase the marginal product The input is utilized more efficiently, which offers greater output for each unit added as input.

After the peak, the MP curve starts to decline. The law of diminishing returns causes the marginal product to decrease even when more units of the variable inputs are added. The variable input is abundant in this stage relative to the fixed inputs. So, the productivity of additional units of the input diminishes.

Eventually, the MP curve comes down to intersect the horizontal axis and becomes negative. This indicates that the MP has become negative, which implies that each additional unit of the variable input will now reduce the total product. The negative slope of MP occurs during the negative returns stage of the TP curve. This occurs when the productivity of the input variable turns counterproductive, which leads to inefficiencies and a reduction of output.

In summary, the MP curve rises initially, reaches its maximum, and then comes down before becoming negative.

The Shape of the Average Product Curve

The AP curve rises up initially and reaches its peak before the MP curve starts to move down. In the early stages of production, with the addition of more units of the variable input, the TP increases at an increasing rate. As the AP is measured by dividing the total product by the total quantity of input, the AP curve rises initially. Each added variable unit increases the TP, which results in higher average production values.

As the MP curve starts to diminish, the AP curve starts to decline after reaching its peak, the law of diminishing returns sets in, leading the MP to decrease as more units of the variable input are added. Since the AP is influenced by the MP, the decline in MP leads to a decline in AP. The AP curve goes on to decline until it intersects with the MP curve.

The AP curve generally intersects the MP curve at its peak. At this intersection point, the AP curve and the MP curve values are the same. This represents the maximum level of the AP. After this point, the MP curve comes below the AP curve, which causes the average product to decrease.

So we can say that, the AP curve rises initially, reaches its peak, and then declines gradually. The shape of the AP curve indicates the changing productivity of the changing input. It is influenced by the various stages observed in the TP and MP curves.

Conclusion

The curves of TP, MP, and AP can provide needful information about the production process, and so they are of interest to manufacturers who want to maximize the production output.

FAQs

Qns 1. What is meant by total product?

Ans. Total product refers to the total quantity of output produced by a firm or an individual producer during a given period.

Qns 2. What is the shape of the marginal product curve in short?

Ans. The MP curve initially rises, reaches a maximum, and then declines before becoming negative

Qns 3. What is the shape of the average product curve in short?

Ans. The AP curve initially rises, reaches a peak, and then declines.