The cost theory of microeconomics includes a study of total, average and marginal product.
Total product : is defined as the total quantity of output produced by a firm in the given inputs.
TP= AP X L
TP= SIGMA MP
Where, AP is averege Product
TP is total product
MP is marginal product
L is labour
Average Product is defined as the Average produced by every worker.
when we divide the total product by output we get average product .
(Total Product)/(Variable Inputs Employed)=Averge products
IN the same way, we calculate the average physical product of capital
"The net change in total production by using the additional units of labor is known as Marginal product mulitplied by 10 lots of Labor" 'Marginal Product is similar to average product but is looked at from another perspective. Discrete marginal product is defined as the change in total product that comes as a result of a one unit increase in the variable input/capital level of a firm. Continuous marginal product is calculated as the derivative of total product with respect to the variable input employed. This can be represented as: Therefore allowing one to attain the following results:
where TP is total product, MP is marginal product and VI is variable inputs. The analysis of marginal product is foundational to explaining the law of supply (upward-sloping supply curve) via the Law of Diminishing Marginal Returns.