AVERAGE PRODUCT CURVE: A curve that graphically illustrates the relation between average product and the quantity of the variable input, holding all other inputs fixed. This curve indicates the per unit output at each level of the variable input. The average product curve is one of three related curves used in the analysis of the short-run production of a firm. The other two are total product curve and marginal product curve.The average product curve illustrates how average product is related to a variable input. While the standard analysis of short-run production relates average product to labor, an average product curve can be constructed for any variable input.
The shape of this average product curve is worth noting. For the first two workers of variable input, average product increases. This is reflected in a positive slope of the average product curve. After the third worker, the average product declines. This is seen as a negative slope. While average product continues to decline, it never reaches zero nor becomes negative. To do so would require total product to become zero and negative, which just does not happen. The hump-shape of the average product curve indirectly results from increasing and decreasing marginal returns. The upward-sloping portion of the average product curve, up to the second worker, is indirectly due to increasing marginal returns. The downward-sloping portion of the average product curve, after the third worker, is indirectly due to decreasing marginal returns. and the law of diminishing marginal returns. Check Out These Related Terms... | total product | marginal product | average product | total product curve | marginal product curve | production function | law of diminishing marginal returns | marginal returns | production stages | Or For A Little Background... | short-run production analysis | production | production cost | variables | labor | capital | supply | principle | business | economic analysis | marginal analysis | factors of production | microeconomics | And For Further Study... | long-run production analysis | production possibilities | production inputs | production time periods | total product and marginal product | total product and average product | average product and marginal product | Recommended Citation: AVERAGE PRODUCT CURVE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: November 26, 2024]. |
