Dominick Salvatore Schaums Outline of Microeconomics, 4th edition Schaums Outline Series 2006

CHAPTER 6
Theory of Production
6.1 PRODUCTION WITH ONE VARIABLE INPUT: TOTAL, AVERAGE,
AND MARGINAL PRODUCT
The production function for any commodity is an equation, table, or graph showing the (maximum) quantity
of the commodity that can be produced per unit of time for each of a set of alternative inputs, when the best
production techniques available are used.
A simple agricultural production function is obtained by using various alternative quantities of labor per
unit of time to farm a fixed amount of land and recording the resulting alternative outputs of the commodity
per unit of time. [We refer to cases such as this, where at least one factor of production or input is fixed, as
the short run.] The average product of labor (AP L ) is then defined as total product (TP) divided by the
number of units of labor used. The marginal product of labor (MP L ) is given by the change in TP per unit
change in the quantity of labor used.
EXAMPLE 1. The first three columns of Table 6.1 give a hypothetical short-run production function for wheat. Land is
measured in acres, labor in worker-years, and total product (TP) in bushels per year. All units of land, labor, or wheat are
assumed to be homogeneous or of the same quality. The average product of labor (AP L ) figures in column (4) are obtained
by dividing each quantity in column (3) by the corresponding quantity in column (2). The marginal product of labor (MP L )
figures in column (5) are obtained by finding the differences between the successive quantities in column (3).
(1)
Land
(2)
Labor
Table 6.1
(3)
TP
(4)
AP L
(5)
MP L
1 0 0 0 ...
1 1 3 3 3
1 2 8 4 5
1 3 12 4 4
1 4 15 3 3 4
3
1 5 17 3 2 5
2
1 6 17 2 5 6
0
1 7 16 2 2 7
21
1 8 13 1 5 8
23
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