The concept of total product, marginal product and average product is very important in economics. Let us discuss them one by one:
TOTAL PRODUCT (TP): It is the sum total of output produced by all the units of variable factor along with the fixed factors of production.
TP=50+70+80+80+60=340 UNITS OF A COMMODITY (Refer below table)
MARGINAL PRODUCT (MP): It is the addition made to total product by using one more unit of variable factor.
MP= 70-50= 20 UNITS (Refer below table)
AVERAGE PRODUCT (AP): it is the output per unit of variable factor.
|LABOUR||TOTAL PRODUCT||AVERAGE PRODUCT||MARGINAL PRODUCT|
The above table is showing that the total product is 50+70+80+80+60=340. Average product is calculated by using formula AP= TP/L and marginal product is calculated by using formula MP= TPn-TPn-1
Which shows that marginal product is falling then becomes zero and thereafter it becomes negative.
The table shows that: i) as long as MP is increasing the TP is also increasing at increasing rate.
ii) When MP starts diminishing, TP increase at diminishing rate.
iii) When MP=0 there is no addition to TP.
iv) When MP is negative, TP starts falling.
I hope you have understood the concept of total product, marginal product and average product