The shape of the total product curve is a function of specialisation, teamwork and utilising the variable input with the fixed inputs. The TP (total product) curve represents the total amount of output (end result) that an enterprise can manufacture within a provided amount of labour. As and when the amount of labour changes, total output changes.
We quantify units of labour along with the horizontal axis and output (end result) along with the vertical axis. With L quantities of labour, the enterprise can manufacture q1 quantities of output at most.
According to the law of variable proportions, the marginal product of an input initially increases, and after a definite level (degree) of employment, it starts decreasing.
The MP curve hence looks like a reverse ‘U’ shaped curve as in diagram Average And Marginal Product Curves. Now, let us see what the AP curve appears to be. For the 1st unit of the variable input, one can easily have a look at it and come to the conclusion that both the MP and AP are alike. Now, as we raise the amount of input, the MP increases.
AP being the aggregate of marginal products, also increases, but increases less than MP. After a point, the MP starts decreasing. As long as the value of MP stays higher than the value of the AP, the AP continues to increases. Once MP has decreased sufficiently, its value becomes less than the AP, and the AP also starts decreasing. AP curve is also reverse ‘U’ shaped.
This is detailed and elucidated information about the concept Shapes Of Total Product, Marginal Product And Average Product Curves. To learn more, stay tuned to BYJU’S.