5 Questions
What is the formula for Marginal Product (MP) in the context of the given production function?
MP = TPn – TPn-1
What does the Average Product (AP) represent in the context of the given production function?
Per unit production of the variable factor
What does Marginal Product (MP) measure in the production function?
Increase in total output when an extra unit of input is used
How is Marginal Product (MP) calculated from the given Total Product (TP) values?
By finding the difference between consecutive TP values
What is the relationship between Marginal Product (MP) and Average Product (AP) when MP is greater than AP?
AP is increasing
Study Notes
Production Function
- Production is the transformation of resources into commodities, combining inputs to get the output.
- Inputs are anything used by the firm for production, such as:
- Labour
- Capital
- Raw materials
Classification of Inputs
- Fixed inputs:
- Quantity remains unchanged
- Examples:
- Land
- Machinery
- Top management
- Variable inputs:
- Quantity is directly related to the volume of output
- Examples:
- Labour
- Fuel
- Raw materials
Output
- Refers to the amount of a product produced by the firm during a specified period of time.
Profit
- Pure surplus or excess of total receipts over total cost
- Calculated as: Profit = Total Revenue – Total cost
Total Product (TP) or Total Physical Product (TPP)
- Refers to the total volume of goods and services produced during a specified period of time
- Equal to the sum of marginal product
Test your knowledge of production functions with this quiz. Explore the concepts of inputs, factors of production, and the transformation of resources into goods and services. Sharpen your understanding of fixed and variable inputs with this insightful quiz.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
