Explain the relationship between Average Product & Marginal Produc

Question

Explain the relationship between Average Product & Marginal Product, and Average Variable Cost & Marginal Cost with the help of diagrams.

20 Apr 2024

Answer :

Word Count : 705

The relationship between Average Product & Marginal Product, and Average Variable Cost & Marginal Cost is fundamental in understanding the production and cost behavior of a firm. These concepts are closely related and can be effectively explained with the help of diagrams.

Average Product and Marginal Product:

Average Product (AP) represents the output produced per unit of input, typically labor. It is calculated by dividing the total output by the quantity of the input used.

Marginal Product (MP) is the additional output produced by employing one more unit of input, holding all other inputs constant. It measures the change in total output resulting from a one-unit change in the variable input.

The relationship between AP and MP can be illustrated using the following diagram:

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