Question

What is meant by Average Production?

Hint:

Remember: AP peaks where MP = AP; before that MP $>$ AP, after that MP $<$ AP.

Answer 1

Definitions: Total Product (TP) is the total output produced; Marginal Product (MP) is the additional output from one more unit of input; Average Product (AP) is $TP$ per unit of the input.
Relationships: When MP exceeds AP, AP rises; when MP is below AP, AP falls; MP intersects AP at AP's maximum—parallel to the logic of averages and marginals.
Use: AP gauges labour productivity and helps firms assess efficiency at different employment levels. In the short run, AP first increases due to specialization and then declines because of diminishing returns as fixed inputs become binding.