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ADAM SMITH: A Scottish professor (born 1723, died 1790) who is considered the father of modern economics for his revolutionary book, entitled An Inquiry into the Nature and Causes of the Wealth of Nations published in 1776.

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PRODUCT:

A generic term for a tangible good or an intangible service that is the output or end result of the resource transformation process of a business firm. This notion of product usually surfaces in the context of analyzing the short-run production of a firm, often modified by the terms total, marginal, and average, as in total product, marginal product, and average product.
Product is another term for the output of a firm's production activity. The product of a firm might be a tangible good or an intangible service. It might be sold to consumers as a final consumption good or other business firms as a capital good. The product might be purchased by government or exported to another country. Or it might even serve as an intermediate input in the production of another good.

A Few Examples

Firms produce a wide range of different products. A few examples are illustrated with the hypothetical economy of Shady Valley. An extensive array of analogous real world products also exists.
  • Consider, for example, a tangible good offered by Waldo's TexMex Taco World restaurant. A key product for Waldo is the Super Deluxe TexMex Gargantuan Tacos (with sour cream and jalapeno peppers).

  • Another example of a product is provided by the Shady Valley Amusement Park. In this case the produce is the intangible service provided by thrilling rides on the Monster Loop Death Plunge Roller Coaster.

  • On the manufacturing side of the economy, the product generated by Mona Mallard's Duct Tape factory is rolls and rolls of Mona Mallard Duct Tape.

  • An example of a product that is an intermediate good used for other production is quagliminium, a rare mineral substance, mined by the Queoldiolian Quagliminium Extraction Concern operating in the Republic of Northwest Queoldiolia.

Total, Marginal, and Average

The analysis of short-run production is most concerned with the connection between the amount of product generated by a firm and the quantity of the variable input used. This gives rise to three related product notions--total product, marginal product, and average product.
  • Total Product: This is the total quantity of output produced by a firm, usually corresponding with a given quantity of inputs. The relation between total product and a variable input such as labor is the foundation for the short-run production analysis.

  • Marginal Product: This is the change in total product resulting from a unit change in a variable input, keeping all other inputs unchanged. Marginal product is guided by the law of diminishing marginal returns and plays a big role in the short-run production decision by a firm.

  • Average Product: This is the total quantity of output produced per unit of variable input, holding all other inputs unchanged.

<= PRODUCER SURPLUSPRODUCT DIFFERENTIATION =>


Recommended Citation:

PRODUCT, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2020. [Accessed: April 4, 2020].


Check Out These Related Terms...

     | output | product inputs | fixed input | variable input | production function | production time periods | total product | marginal product | average product | law of diminishing marginal returns | marginal returns | production stages |


Or For A Little Background...

     | short-run production | analysis | production | production cost | variables | labor | capital | economic analysis | marginal analysis | factors of production | microeconomics |


And For Further Study...

     | long-run production analysis | total product and marginal product | average product and marginal product | total product and average product | gross domestic product |


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