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TRANSFERRABLE OUTPUT: An output that has a relatively large geographic market area due to the low cost of transportation. The low transportation cost means it is easier (that is, less expensive) to bring the output to the consumers rather than locating consumers near the output. Like many things, transferrable outputs are a matter of degree. At the other end of the spectrum lies local outputs. Most manufactured goods tend to have a high degree of transferability. Information, especially through television broadcasting and Internet web sites, is also relatively easily transported.
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AVERAGE PRODUCT AND MARGINAL PRODUCT: A mathematical connection between average product and marginal product stating that the change in the average product depends on a comparison between the average product and marginal product. If marginal product is less than average product, then average product declines. If marginal product is greater than average product, then average product rises. If marginal product is equal to average product, then average product does not change. The relation between average product and marginal product is one of several that reflect the general relation between a marginal and the corresponding average. The general relation is this:- If the marginal is less than the average, then the average declines.
- If the marginal is greater than the average, then the average rises.
- If the marginal is equal to the average, then the average does not change.
This general relation surfaces throughout the study of economics. It also applies to average and marginal cost, average and marginal revenue, average and marginal propensity to consume, and well, any other average and marginal encountered in economics.Making TacosAverage and Marginal Product | | The graph at the right for the hourly production of Super Deluxe TexMex Gargantuan Tacos (with sour cream and jalapeno peppers) illustrates the relation between average product and marginal product.The Law of Diminishing Marginal ReturnsThis average-marginal relation for production is closely tied to the law of diminishing marginal returns. Marginal product declines with the onset of diminishing marginal returns. The "hump shape" of the marginal product curve reflects first increasing marginal returns then decreasing marginal returns.For this reason, the "hump shape" of the average product curve is attributable, indirectly, to the law of diminishing marginal returns and the "hump shape" of the marginal product curve. Increasing marginal returns means marginal product is rising and because average product necessarily starts at zero (zero production means zero average product), marginal product lies above average product and causes it to rise, as well. With the onset of decreasing marginal returns, marginal product declines. However, for this initial part of the marginal product decline, average product continues rising because marginal product is still greater. After marginal product falls enough to meet up and intersect average product, average product peaks. As marginal product, again guided by the law of diminishing marginal returns, continues to decline and falls below average product. This causes the decline of average product. In essence, the average product curve plays catch-up to the marginal product curve, sort of follow the leader. At first, marginal product rises, so average product tags along like an annoying younger sibling. Then marginal product decides to fall, so average product chases after it. Because marginal product is guided by the law of diminishing marginal returns, so too is average product.
Recommended Citation:AVERAGE PRODUCT AND MARGINAL PRODUCT, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: May 2, 2024]. Check Out These Related Terms... | | | | Or For A Little Background... | | | | | | | | | | | And For Further Study... | | | | | | |
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The 1909 Lincoln penny was the first U.S. coin with the likeness of a U.S. President.
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