Average product
Also called: AP, average return · Topic: Production Function, Returns and Costs · NCERT: Class 12, Ch 3 "Production and Costs"
Meaning
Average product (AP) is output per unit of the variable input. It is also called average return. The formula is AP_L = TP_L / L, where TP is total product and L is the number of workers. AP is also the average of all the marginal products up to that level. Its curve is inverse U-shaped: it rises first and then falls. AP stays positive as long as total product is positive.
Example
In NCERT Table 3.2, with capital fixed at 4 units, 3 workers produce 40 units, so AP = 40/3 = 13.33. That is the highest AP. With 6 workers producing 57 units, AP falls to 9.5.
Don't confuse with
- Marginal product: MP is the extra output from one more worker. AP is output per worker on average. MP can become zero or negative, but AP cannot while TP is positive.