Question 1

What is total product in economics?

Accepted Answer

Total product is the total output a firm produces during a specific period based on its combination of inputs. In a clothing firm, for example, capital like sewing machines is fixed in the short run, while labor represents the variable input. Total product changes as the firm adjusts variable inputs while keeping fixed inputs constant.

Question 2

How does total product change as more workers are hired?

Accepted Answer

Total product initially increases at an accelerating rate when the first workers are hired, showing increasing marginal returns. As more workers are added, total product continues rising but at a slower rate, indicating diminishing marginal returns. Eventually, hiring too many workers relative to fixed capital causes total output to decrease, reflecting negative marginal returns.

Question 3

What does the total product curve look like across different production stages?

Accepted Answer

The total product curve rises steeply during increasing marginal returns, creating a convex shape. It rises gradually during decreasing marginal returns, becoming concave to the origin. Finally, it slopes downward during negative marginal returns as total output declines despite additional variable input.

Question 4

How is average product calculated and what does it measure?

Accepted Answer

Average product equals total product divided by the quantity of variable input used, typically measured as output per worker. It indicates worker productivity by showing how much output each worker produces on average. This metric helps firms assess labor efficiency at different production levels.

Question 5

Why does the average product curve eventually decline?

Accepted Answer

The average product curve initially rises as the fixed input is used more efficiently with additional workers. It reaches a maximum point, then declines as diminishing returns to the variable input set in. When each additional worker contributes less output than previous workers, the average output per worker falls.

Question 6

What is the relationship between fixed and variable inputs in the short run?

Accepted Answer

In the short run, fixed inputs like capital equipment cannot be changed, while variable inputs like labor can be adjusted. A firm's total product depends on how effectively it combines these inputs. The ratio of variable to fixed inputs determines whether the firm experiences increasing, diminishing, or negative marginal returns.

Question 7

When does average product reach its maximum?

Accepted Answer

Average product reaches its maximum point where it intersects with the marginal product curve. At this point, the additional output from hiring one more worker equals the average output per worker. Beyond this intersection, average product declines as marginal returns diminish.

Total Product and Average Product

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