Question

What is the relationship between the AP­L the MPL the AVC and MC curves? Use a diagram to assist your explanation.

Answer 1

The Average product of labour is the average of amount that can be produced by each unit of labour. The Average product of labour is calculated by dividing the total product by quantity of output produced. The marginal product of labour is the additional amount of output produced by adding one more unit of the labour. In order to show the relationship between APL and MPL we must use a diagram.

In the above diagram, the MPL and APL are shown together , the average productivity of labour and marginal productivity of labour becomes equal, the average product is at its maximum. When the marginal product of the labour is greater the average product of the labour, the average product of labour is increasing and the and if the marginal product is less than the average product, the average product is decreasing.

The above given is the graphs of Marginal cost and Average variable costs. The magrinal cost is the additional cost incurred from producing an additonal unit of the commodity and the AVC is the average of total variable costs for producing the commodity. The marginal cost is the additional cost so when it is below the AVC it must be falling and when the MC is above the AVC , the AVC must be raising. The MC curve intersects the minimum point of AVC curve and there will be the MC and AVC equal. If we flip the AVC and MC curve it become APL and MPL curves.