What does total product curve indicate?

What does total product curve indicate?

The TP (total product) curve represents the total amount of output (end result) that an enterprise can manufacture within a provided amount of labour. As and when the amount of labour changes, the total output changes.

What is the relationship between the different product curves?

Product curves show the relationship between output and the quantity of a factor; they therefore have the factor quantity on the horizontal axis. Cost curves show how costs vary with output and thus have output on the horizontal axis. Marginal cost in Panel (b) is the slope of the total cost curve in Panel (a).

What is the relationship between total product curve and marginal product curve?

Relationship between Marginal Product and Total Product When the Marginal Product (MP) increases, the Total Product is also increasing at an increasing rate. This gives the Total product curve a convex shape in the beginning as variable factor inputs increase.

What is the relationship between total product and total cost?

Finally, when total product is increasing at an increasing rate the total cost is increasing at a decreasing rate. When total product is increasing at a decreasing rate, the total cost is increasing at an increasing rate.

What is the relationship between MPL and APL?

Average Product of Labor (APL) equals Q/L while Marginal Product of Labor (MPL) equals the extra output gained by hiring one more unit of labor. The curves are to the right and look the way they do because of the law of diminishing returns.

What is the relationship between TP and MP?

The relationship between TP and MP is explained through the Law of Variable Proportions. As long as the the TP increases at an increasing rate, the MP also increases. This goes on till MP reaches maximum. When TP increases at a diminishing rate, MP declines.

What are the relationship between total product average product and marginal product?

What is the relationship between the three short-run total cost curves?

C = FC + VC. There are three short-run average cost measures: the average variable cost, average fixed cost and average total cost. Note that since variable cost generally increases with the amount of output produced, the average variable cost can increase or decrease as output increases.

What is relationship between TP and MP?

What is the relationship between MP and AP?

AP increases as long as MP is greater than AP. Till the point p, AP is at maximum.

What is the relationship between total product and average product?

What is the relationship between the production function and the cost curves?

Assuming that factor prices are constant, the production function determines all cost functions. The variable cost curve is the constant price of the variable input times the inverted short-run production function or total product curve, and its behavior and properties are determined by the production function.

What is the relationship between short run MC and MPL?

MC = w / MPl. The higher the marginal product of labor, i.e., the more productive labor is, the lower the marginal costs of producing output.

What is the relationship between marginal product of labor and marginal cost?

Marginal product is the extra output generated by one additional unit of input, such as an additional worker. Marginal cost and marginal product are inversely related to one another: as one increases, the other will automatically decrease proportionally and vice versa.

What is the relationship between AP and MP curves?

What is the relationship between TP and AP?

Relationship between TP and AP Simultaneously, AP continues to rise. When TP rises at a decreasing rate and reaches its maximum point, AP falls. When TP starts falling at increasing rate, AP also falls but at diminishing rate. TP can be ascertained from AP by multiplying units of output with AP.

What relationship can you observe between TP and AP curves?

Initially, as more and more units of labour inputs are employed, TP increases at an increasing rate. After this, TP increases but at decreasing rate. Simultaneously, AP continues to rise. When TP rises at a decreasing rate and reaches its maximum point, AP falls.

What is the relationship between short-run and long run cost curves?

Thus, the long-run average cost (LRAC) curve is actually based on a group of short-run average cost (SRAC) curves, each of which represents one specific level of fixed costs. More precisely, the long-run average cost curve will be the least expensive average cost curve for any level of output.

What is the relationship between total cost curve and total variable cost curve?

The average total cost curve is typically U-shaped. Average variable cost (AVC) is calculated by dividing variable cost by the quantity produced. The average variable cost curve lies below the average total cost curve and is typically U-shaped or upward-sloping.

What are the relationship between total product and marginal product in economics?

Relationship between Total Product and Marginal Product TP increases at an increasing rate when MP increases. This pattern provides a Total Product Curve with a shape of convex. It then continues till MP reaches the maximum point of TP. Where MP declines and stays positive, TP increases at a decreasing rate.