Google
Thursday 
October 18, 2018 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
ACCELERATOR: The ratio between investment expenditures and the change in gross domestic product. This is based on the notion that business investment depends on the rate of growth of aggregate output. If the economy is expanding, in other words, then the business sector invests in more capital goods to produce the extra output needed. This accelerator effect modifies and magnifies the simply multiplier effect based on the induced consumption and the marginal propensity to consume.

Visit the GLOSS*arama


TOTAL PRODUCT AND AVERAGE PRODUCT:

A graphical connection between the total product curve and the average product curve stating that the slope of a line between the origin and any point on the total product curve is equal to the average product. Imagine a ray shooting from the origin and hitting the total product curve. As this ray hits each point on the curve, remaining anchored at the origin, the slope of the ray changes, and the slope of this ray is average product.
What is the logic behind this total-average relation? The slope of any line is the rise over the run, in this case the change in total product divided by the change in variable input. This, by the way, is the verbal description of marginal product. However, because the line is anchored at the origin, any changes in total product and variable input are changes from zero. In other words, the "change in" calculations are not incremental changes, but rather the total values up to that point of production--total product and the total quantity of the variable input used to produce the total product. This is simply the calculation of average product.

Making Tacos

Total and Average Product
Product Curves

A graph should help illustrate the relation between total product and average product. The graph to the right is the hourly production of Super Deluxe TexMex Gargantuan Tacos (with sour cream and jalapeno peppers). The top panel of the graph is the total product curve. The bottom panel is the average product curve.

For the relation between these two curves, a few buttons need to be clicked.

  • After clicking the [A] button, a line connecting the origin with a point on the total product curve is revealed. This point is a total product of 120 Gargantuan Tacos resulting from employing 6 workers. The slope of this line is equal to 10 tacos per worker. This corresponds exactly with the average product of 10 tacos per worker.

  • Clicking the [B] button displays a second line connecting the origin with a total product/variable input quantity of 125 Gargantuan Tacos and 8 workers. The slope of this line is equal to 15.83 tacos per worker, which exactly to the average product of 15.83 tacos per worker.

  • Clicking the [C] button displays a third line connecting the origin with a total product/variable input quantity of 110 Gargantuan Tacos and 10 workers. The slope of this line is equal to 11 tacos per worker, which is exactly to the average product of 11 tacos per worker.

Marginal and Average

One additional button that needs to be clicked is the one labeled [Marginal]. This button displays a relatively important line. Because this line connects the origin and the total product curve, like the other lines presented here, the slope measures average product. However, this line is also tangent to the total product curve. As a tangent, the slope of this line is also the slope of the curve at the point of tangency. But the slope of the total product curve is marginal product.

What does this mean? It means that this particular line measures both average product and marginal product. It means that at 2.5 workers, marginal product and average product are exactly the same.

<= TOTAL PRODUCTTOTAL PRODUCT AND MARGINAL PRODUCT =>


Recommended Citation:

TOTAL PRODUCT AND AVERAGE PRODUCT, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: October 18, 2018].


Check Out These Related Terms...

     | total product and marginal product | average product and marginal product | production stages |


Or For A Little Background...

     | short-run production analysis | total product | average product | total product curve | average product curve | graphical analysis | marginal analysis |


And For Further Study...

     | total-marginal relation | average-marginal relation | law of diminishing marginal returns | production possibilities | short-run production analysis | long-run production analysis | law of diminishing marginal utility | law of increasing opportunity cost | total cost | average cost |


Search Again?

Back to the WEB*pedia


APLS

BLUE PLACIDOLA
[What's This?]

Today, you are likely to spend a great deal of time looking for a downtown retail store trying to buy either a rechargeable battery for your camera or a coffee cup commemorating the first day of spring. Be on the lookout for strangers with large satchels of used undergarments.
Your Complete Scope

This isn't me! What am I?

John Maynard Keynes was born the same year Karl Marx died.
"Executives who get there and stay suggest solutions when they present the problems. "

-- Malcolm Forbes, business executive

RBC
Real Business Cycle
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2018 AmosWEB*LLC
Send comments or questions to: WebMaster