The average product is the volume of output per unit of resources used. The average product characterizes the productivity of a variable factor of production; therefore, it is often called labor productivity.
Explanation:
The concepts of the total, average, and marginal products are used in the theory of production. The total product (TP) is the total amount of the manufactured product, which changes as the use of the variable factor increases.
The average product (AP) is the ratio of the total product to the amount of the variable factor used in the production. The marginal product (MP) is the amount of additional product obtained by using an integral unit of the variable resource.
In the short term period, the company may vary the use of labor resources, but cannot affect the amount of capital used. Define the average product of labor, based on the table data.
The average product of labor will be determined by the formula:
АР(1)=ТР(1)/1=35/1=35,
АР(2)=ТР(2)/2=80/2=40, etc.
The results of the calculations are listed in the table below.
The average labor product is the volume of output per unit of the factor used, provided that all other factors remain unchanged. AP of labor increases while its marginal product exceeds the average and, conversely, decreases when the ratio between these two indicators becomes inverse. If the average product of labor is maximum, then it is equal to the marginal product.
Thus, in a situation where work is used most efficiently, the values of its average and marginal productivity are similar to each other, and it is necessary to speak about labor productivity.