# Production in the Short Run. Short-run production Total physical product (TPP)

## Presentation on theme: "Production in the Short Run. Short-run production Total physical product (TPP)"— Presentation transcript:

Production in the Short Run

Short-run production Total physical product (TPP)

Number of farm workers Wheat production per year from a particular farm Tonnes of wheat produced per year Number of workers 0 1 2 3 4 5 6 7 8 TPP 0 3 10 24 36 40 42 40

Number of farm workers Wheat production per year from a particular farm Tonnes of wheat produced per year Number of workers 0 1 2 3 4 5 6 7 8 TPP 0 3 10 24 36 40 42 40

The law of diminishing (marginal) returns A more units of the variable factor are used, there will come a point where additional units of the variable factor will produce less than previous units.

Wheat production per year from a particular farm Number of farm workers Tonnes of wheat produced per year TPP b Diminishing returns set in here d Maximum output

Short-run production Marginal physical product (MPP) = TPP/ Q f Marginal physical product (MPP) = TPP/ Q f

Wheat production per year from a particular farm Number of farm workers (L) Tonnes of wheat per year TPP Tonnes of wheat per year Number of farm workers (L) TPP = 7 L = 1 MPP = TPP / L = 7

Wheat production per year from a particular farm Tonnes of wheat per year TPP Tonnes of wheat per year MPP Number of farm workers (L) Number of farm workers (L)

Short-run production Average physical product (APP) = TPP/Q f Average physical product (APP) = TPP/Q f

Wheat production per year from a particular farm Tonnes of wheat per year TPP Tonnes of wheat per year MPP Number of farm workers (L) Number of farm workers (L)

Wheat production per year from a particular farm Tonnes of wheat per year TPP Tonnes of wheat per year APP MPP APP = TPP / L Number of farm workers (L) Number of farm workers (L)

b b Wheat production per year from a particular farm Tonnes of wheat per year TPP Tonnes of wheat per year APP MPP Diminishing returns set in here Number of farm workers (L) Number of farm workers (L)

Wheat production per year from a particular farm Tonnes of wheat per year TPP Tonnes of wheat per year APP MPP b d d Number of farm workers (L) Number of farm workers (L) Maximum output b

c c Wheat production per year from a particular farm Tonnes of wheat per year TPP Tonnes of wheat per year APP MPP b b d d Number of farm workers (L) Number of farm workers (L) Slope = TPP / L = APP

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