Concept of Total, Average and Marginal Product
What is Total Product (TP)?
Total product refers to the total quantity of goods produced at a particular time as a result of the use of all the factors of product. Total product depends mainly on the quantity of all the factors of production that are applied in production.
TP = AP x Labour
What is Average Product (AP)? Average product refers to total product divided by the number of variable factor of production – labour. It is therefore per unit product produced by each labourer or worker.
What is Marginal Product (MP)?Â
This is the additional product produced as a result of the application of one additional unit of variable factor when all other factor are fixed. That is, increase in total product as a result of the employment of one additional unit of product.
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