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Economics notes

Definition And Calculation Of Total Product, Average Product And Marginal Product

➡️ Increased output can be achieved by using more of the fixed and variable factors of production.
➡️ The combination of fixed and variable factors of production determines the level of output.
➡️ The optimal combination of fixed and variable factors of production is determined by the marginal productivity of each factor.

What is the difference between total product, average product, and marginal product in economics?

Total product refers to the total output produced by a firm or industry. Average product is the total output divided by the number of units of input used to produce it. Marginal product is the additional output produced by using one more unit of input.

How do you calculate total product, average product, and marginal product?

Total product is calculated by adding up the total output produced by a firm or industry. Average product is calculated by dividing the total output by the number of units of input used to produce it. Marginal product is calculated by finding the change in output resulting from a change in input.

Why is it important to understand the concept of total product, average product, and marginal product in economics?

Understanding these concepts is important because they help firms and industries make decisions about how much input to use in order to maximize output and profits. By analyzing the relationship between input and output, firms can determine the most efficient level of production and make adjustments as needed. Additionally, these concepts are important for understanding the overall productivity of an economy and how it can be improved.

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