Total product
Also called: TP, total return, total physical product · Topic: Production Function, Returns and Costs · NCERT: Class 12, Ch 3 "Production and Costs"
Meaning
Total product (TP) is the total output a firm gets from a variable input when all other inputs are held constant. A variable input is one the firm can change, usually labour. TP is also called total return or total physical product. It equals the sum of all marginal products up to that level. Marginal product is the extra output from one more unit of the input. TP first rises at an increasing rate, then at a decreasing rate. It is highest where marginal product becomes zero.
Example
A farmer's land and capital are fixed at 4 units. With 1, 2, 3, 4, 5 and 6 workers, TP is 10, 24, 40, 50, 56 and 57. The marginal products (10 + 14 + 16 + 10 + 6 + 1) add up to 57, which is the TP at 6 workers.
Don't confuse with
- Average product: this is TP divided by the number of units of the input (AP = TP/L). It is output per worker, not total output.