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- Relationship between AP and MP is stated below: (i) AP increases when MP is greater than AP. (ii) AP is maximum when both MP and AP are equal. (iii) AP decreases when MP is less than AP. (iv) AP continues to be positive even when MP is zero or negative. (v) AP may rise even when MP falls but lies above AP.
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Apr 6, 2023 · When MP is equal to AP, AP is at its maximum; i.e., at the 4 th unit of the variable factor. 3. When MP is less than AP, AP falls; i.e., from the 5 th unit of the variable factor.
- Total Product. The total product refers to the total amount (or volume) of output produced with a given amount of input during a period of time. Therefore, a firm wanting to increase its Total Product in the short run will have to increase its variable factors as the fixed factors remain unchanged (that is why they are ‘fixed’ in the short run).
- Marginal Product. The total product can be calculated by adding subsequent marginal returns to an input (also known as the marginal product). The increase in output per unit increase in input is called Marginal Product.
- Average Product. Average product, as the name suggests, refers to the per unit total product of the variable factor (here, labour). Hence, the calculation of Average Product is also very simple.
- TP, MP, AP: Shape of the Curves. When we take a look at the figure below, the following can be noted about the shapes of the TP, MP and AP curves. The TP curve first increases at an increasing rate, after which it continues to increase but at a decreasing rate, giving the curve an S-shape.
Relationship between AP and MP is stated below: (i) AP increases when MP is greater than AP. (ii) AP is maximum when both MP and AP are equal. (iii) AP decreases when MP is less than AP. (iv) AP continues to be positive even when MP is zero or negative.
Mar 2, 2020 · RELATIONSHIP BETWEEN TP AP AND MP: When TP rises MP falls; When TP becomes maximum and constant MP becomes 0; TP declines MP becomes negative.
Jan 17, 2024 · 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.
AP= Average Product. TP= Total Product. L= Labour. Marginal Product is the change in the total product due to change in the variable facto. In other words, marginal product is the addition to the total product by the employment of an additional unit of variable factor. MP= TPn - TPn-1.
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When MP and AP become equal at the 3rd unit, AP is at its highest. When MP becomes less than AP, from the 4th unit of variable factor, AP falls. After that, both MP and AP fall but the curve of MP is steeper than that of AP, and AP remains positive while MP becomes negative.