Question

Present the relation between marginal product and marginal costs as well as between average product and average costs

Answer 1

Marginal product and Marginal cost – A firm may decide to produce some extra out put in its factory By increasing its material ,labor or some machines etc. . So the number of extra output that a firm gets by increasing its inputs is called MP. For example if a firm is producing 100 goods but now decided to produce 50 more units then 50 is Marginal product . And the cost of extra units of inputs (labor, material ,machine etc.) which was increased to get extra output is called Marginal cost .

The relationship between marginal product and marginal cost is that if MC go up MP Comes down and vice versa the main reason is that when a firm produces more units of output then total variable cost increases at diminishing rate   . And when a firm reduces its production the total variable costs increases at increasing rate .Both of them are free from the effects of fixed cost.

When total cost is divided by the number of units produced we gets the average cost . We can also determine it by adding AVC And AFC .

Average product – We can get AP by dividing total of product by the quantity of the variable inputs