The Total Product (TP) curve is a graphical representation of the total output that a business can produce given a certain amount of labour. This curve illustrates how the total output changes with the varying amount of labour. The shape of the TP curve is influenced by factors such as specialisation, teamwork, and the efficient use of variable inputs with the fixed inputs.
In the TP curve, the horizontal axis represents the units of labour while the vertical axis represents the output. For instance, with L units of labour, a business can produce q1 units of output.
The Marginal Product (MP) of an input, as per the law of variable proportions, initially increases with the increase in employment levels. However, after reaching a certain point, it starts to decrease.
This behaviour of the MP curve results in a reverse U-shaped appearance in the average and marginal product curves. The Average Product (AP) curve, which is the total of marginal products, follows a similar pattern. Initially, for the first unit of variable input, the MP and AP are the same. As the input increases, both MP and AP increase, with AP being less than MP. Eventually, MP starts to decrease and once its value becomes less than AP, the AP also begins to decrease. Thus, the AP curve also assumes a reverse U-shape.
This is a comprehensive guide to understanding the shapes of total product, marginal product, and average product curves. Stay connected with our website for more such concepts. .