Question

With the help of a diagram, explain the relationship between Average Product and Total Product under the Law of Variable Proportions.

Answer 1

According to the Law of Variable Proportions, as a producer employs more units of a variable element, total production increases at first at an increasing pace, then at a declining rate, and ultimately starts to fall.

1. The average product (AP) is calculated by dividing the total product (TP) by the variable factor quantity.
2. The AP curve follows the TP curve, but it peaks before TP begins to decline.
3. Initially, when TP increases at a rapid rate, AP rises.
4. When TP starts to increase at a lower pace, AP reaches its maximum and begins to decline.

The connection shows that as more of the variable input is used, each new unit's contribution to the overall output increases initially.