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AGGREGATE OUTPUT: The macroeconomy's total production of final goods and services. You might recognized it by it's official term gross domestic product. Another related term is aggregate supply. This is the total production in the economy that is purchased by the four basic economic sectors -- household, business, government, and foreign. See also aggregate market, aggregate demand, aggregate expenditures.

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TOTAL PRODUCT AND MARGINAL PRODUCT:

A mathematical connection between marginal product and total product stating that marginal product IS the slope of the total product curve. If the total product curve has a positive slope (that is, is upward sloping), then marginal product is positive. If the total product curve has a negative slope (downward sloping), then marginal product is negative. If the total product curve has a zero slope (horizontal), then marginal product is zero.
The relation between total product and marginal product is one of several that reflect the general relation between a total and the corresponding marginal. There general relation is this: A marginal is the slope of the total curve. Marginal is another term for slope.

The general relation between total and marginal surfaces throughout the study of economics, especially utility (total utility and marginal utility), cost (total cost and marginal cost), revenue (total revenue and marginal revenue), and consumption (consumption expenditures and marginal propensity to consume).

Making Tacos

Total and Marginal Product
Product Curves
This two-paneled graph for the hourly production of Super Deluxe TexMex Gargantuan Tacos (with sour cream and jalapeno peppers) that visually illustrates the connection between total product and marginal product.
  • For the first few quantities of the variable input (the number of workers), total product in the top panel is positive AND the slope of the total product curve increases, it becomes steeper. This corresponds with a positive and increasing marginal product in the bottom panel.

  • For the next several quantities of the variable input, the slope of the total product curve flattens out, although positive, the slope decreases. This corresponds to a decreasing marginal product in the bottom panel.

  • For the last few quantities of the variable input, the slope of the total product curve in the top panel is negative. This corresponds with a negative marginal product in the bottom panel.

The Law of Diminishing Marginal Returns

The prime conclusion to drawn from this is the key role played by the law of diminishing marginal returns in the slope of both the marginal product curve and the total product curve. The "hump shape" of the marginal product curve is a direct reflection of first increasing marginal returns, as marginal product rises to a peak, then decreasing marginal returns and the onset of the law of diminishing marginal returns as marginal product falls.

However, because the marginal product curve is essentially a plot of the slope of the total product curve, the shape of the total product curve also reflects the law of diminishing marginal returns. The increasingly steep slope of the total product curve for small quantities of the variable input is due to increasing marginal returns. Then with the onset of the law of diminishing marginal returns causes the total product curve to flatten out and subsequently turn down.

<= TOTAL PRODUCT AND AVERAGE PRODUCTTOTAL PRODUCT CURVE =>


Recommended Citation:

TOTAL PRODUCT AND MARGINAL PRODUCT, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2021. [Accessed: January 19, 2021].


Check Out These Related Terms...

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


Or For A Little Background...

     | total-marginal relation | law of diminishing marginal returns | short-run production analysis | total product | marginal product | total product curve | marginal product curve | graphical analysis | marginal analysis | economic analysis |


And For Further Study...

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


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