Average product is the output produced per unit of a variable input, found by dividing total product by the quantity of that input (such as the number of workers). It measures how productive each unit of input is on average in short-run production.
Average product (sometimes called average physical product) tells you how much output each unit of a variable input produces on average. You calculate it by dividing total product by the amount of the variable input used. If 5 workers produce 50 units, the average product of labor is 10 units per worker.
In the short run, at least one input (like factory size or equipment) is fixed while another (usually labor) can change. As you add more of the variable input, average product usually rises at first, hits a peak, then falls. That inverted-U shape happens because early workers add a lot to output, but eventually the fixed inputs get crowded and each additional worker contributes less. The peak of the average product curve is the most efficient use of that variable input.
This term lives in Topic 7.2, Production in the Short Run, where you study how firms decide how much of a variable input to use when their fixed inputs can't change yet. Average product is one of the three core productivity measures (along with total product and marginal product) that describe a short-run production function.
Understanding average product helps you see where a firm is operating most efficiently and how productivity changes as labor is added. It also sets up the law of diminishing marginal returns and connects directly to how firms eventually think about cost and the stages of production.
Keep studying Principles of Economics Unit 7
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view galleryMarginal Product (Unit 7)
Marginal product is the extra output from one more worker, and it pulls average product up or down. When marginal product is above average product, average product rises; when it's below, average product falls. That's why the marginal product curve always crosses the average product curve at its peak.
Total Product (Unit 7)
Average product comes straight from total product: just divide total product by the number of variable inputs. If you know total output and how many workers made it, you can find average product instantly.
Law of Diminishing Marginal Returns (Unit 7)
This law explains why average product eventually falls. Once added workers each contribute less because fixed inputs are stretched thin, average product is dragged downward after its peak.
Stage of Production (Unit 7)
The three stages of production are defined partly by where average product is rising, peaking, and falling. Stage I ends where average product is maximized, so the curve helps you mark the boundaries between stages.
On quizzes and problem sets, expect to be handed a table of workers and total output and asked to compute average product for each row (total product divided by number of workers). You'll often graph the average product and marginal product curves on the same axes and explain why marginal product crosses average product at its highest point. Short-answer questions may ask you to identify where average product is maximized or to connect a falling average product to the law of diminishing marginal returns. Be ready to interpret the curve, not just calculate the numbers.
Average product is total output divided by total input (output per worker on average), while marginal product is the change in output from adding just one more unit of input. Average product describes the whole group's productivity; marginal product describes only the last unit added. They're related because marginal product pulls average product up when it's higher and down when it's lower.
Average product equals total product divided by the quantity of the variable input, such as output per worker.
The average product curve typically rises, peaks, then falls, forming an inverted-U shape.
Average product is maximized at the point of greatest efficiency for that variable input.
Marginal product crosses average product exactly at the peak of the average product curve.
When marginal product is above average product, average product rises; when below, it falls.
The eventual decline in average product reflects the law of diminishing marginal returns as fixed inputs get crowded.
Average product is the output produced per unit of a variable input, calculated as total product divided by the quantity of that input. For example, if 4 workers make 40 units, the average product of labor is 10 units per worker.
No. Average product is total output divided by all the inputs (output per worker on average), while marginal product is the extra output from adding just one more worker. They differ but are linked: marginal product pulls average product up when it's higher and down when it's lower.
Divide total product by the number of units of the variable input. If total product is 60 units and you employ 6 workers, average product is 60 / 6 = 10 units per worker.
Because of the law of diminishing marginal returns: as you add more variable input to fixed inputs, each new unit eventually adds less output, which drags the average down after the curve reaches its peak.
Marginal product always crosses average product at the highest point of the average product curve. That's also why the peak of average product marks the most efficient use of the variable input.