Chapter 5

Discussion in 'CT7' started by Kanishka, Jul 7, 2018.

  1. Kanishka

    Kanishka Active Member

    Can someone please explain the graph of relationship between total,avg and marginal products on page 4?
     
  2. freddie

    freddie Member

    Firstly, make sure that you are clear on the definitions of TPP (total output of n workers), APP (average output) and MPP (additional output), and also that you are clear on the law of diminishing returns (ie that as you add more labour to the fixed factors, at first there might be increasing marginal returns to labour (ie MPP rises, so TPP rises more than proportionately) but ultimately there will be diminishing marginal returns to labour (ie MPP falls, so TPP rises less than proportionately).

    Then the diagram should be clearer. See the notes on page 5 for further info on the relationships.
     
  3. Kanishka

    Kanishka Active Member

    Thank you
     

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