Average product and marginal product, Microeconomics

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Average product and marginal product:

Average product (AP) is the output per unit of the variable factor employed. In other words, it is the productivity of the variable factor (VF). It is measured by dividing total product (TP) by amount of variable factor employed. i.e

 

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Average product is measured in respect of a variable factor. Where the variable factor is say labour (L), then it is the average product of labour (APL) or the productivity of labour that we can measure as:

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Where the variable factor is capital (K), then can measure the average product of capital (APK) or the productivity of capital as:

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Marginal product is the change in total product resulting from the use of one more (or less) unit of a variable factor. It may also be explained as the rate of change in total product with respect to a variable factor (ΔVF), i.e.

2012_Average product and marginal product3.png


where ? = change. Marginal product is also calculated in respect of variable
factor. The MP of labour (MPL) as:

 

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