The shape of the total product curve is used to determine teamwork by using variable inputs with predetermined input. Total Product or TP also represents the total amount of result or output than a firm can produce within a given time and amount of labour. It is essential to know that the amount of work can change with the change in output as well.
This section will help a student understand the relationship between TP and MP and how it affects the production and cost shapes.
Before understanding the essential functions of production and cost shape, the terms like TP AP MP must be distinguished.
Total product is the total amount of output made with a given amount of input during a period. A firm wanting a rise in the total product in the shortest time or short-run can increase its variable factors as fixed factors will remain the same.
It is essential to know that in long-run factors become variable and a firm can increase its total product by increasing its characteristics. These factors gradually become inconsistent, and the concept of total products aids in understanding the marginal product.
A marginal product can be determined by calculating total product and adding marginal returns. The rise in output per unit and the increase in the input is called a marginal effect. If one takes labour as input for production, then a marginal product can be calculated by using this formula.
MP = Change in output divided by change in the input
TP = ƩMP
The average product is the per-unit total of a product with a variable factor which can be taken as labour. The calculation of average production can be done with the formula-
AP = Total Product divided by units of variable factor input
It can also be calculated by TP = AP x L
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In the above diagram, the TP curve rises at an increasing way after which it gradually rises but at a decreasing rate. This gives the S-shaped, which shows a trend continuing till TP reaches max. Here MP is zero after which TP starts to decrease
In the MP curve, there is even a gradual rise which reaches max and then falls. It is essential to know that when MP is maximum at the point, TP starts to rise in a diminishing way. Here MP is negative while TP remains positive even at its fall.
Now the AP curve shows similar characteristics as MP. It starts to increase and reaches max to fall. At this point, AP rises to its highest level. Here AP becomes equal to MP.
Here the relationship between AP and MP as well as TP is seen in inverted U shape.
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1. What is the Law of Variable Proportion?
Ans. The law of variable proportions helps to understand the different shape of the TP curve. It is usually based on some factors like -
Here one input remains variable while other information stays constant
It helps in determining the percentage in which units of factor can be changed
The constant in the state of technology and its factors can be determined
Here the period is in the short-run
If an individual increases a variable factor and the variables remain constant, then the TP curve increases in a convex shape. This change happens in a diminishing rate after which it decreases and forms an s shape till where TP reaches max.
2. What is the Increasing Return to Factor?
Ans. This is the first stage of production where the phase remains constant, and MP keeps on increasing. Here MP reaches its highest point and starts to fall. In this phase, where TP is rising at a fast rate. This stage usually begins from the origin point and extends till the inflexion region. The point of the TP curve after which it increases in diminishing quality.
This factor is essential in determining the production cost and the changes in curve.
3. What Might Be Possible Reasons for Negative Returns to a Factor?
Ans. There can be different reasons for a negative return in a factor.
Here a fixed factor remains limited in a short-run. When the variable factor passes a specific point, the variable element acted upon an incompetent usage of specified characteristics. This makes MP into negative.
In this efficiency of variable, element and factors may be a reason for negative income if more labour is added to the fixed amount where a marginal factor of variables element decreases, which leads to overfilling.
The fixed factor’s efficiency is also affected when overcrowding occurs in a variable factor. Many labourers cause wear and tear of machines which makes TP fall.