The total product curve has a positive slope.This is directly illustrated by the slope of the average product curve.Ĭonsider these observations about the shapes and slopes of the three product curves in Stage I. Most importantly, marginal product is greater than average product, which causes average product to increase. As more of the variable input is added to the fixed input, the marginal product of the variable input increases. Stage IShort-run production Stage I arises due to increasing average product. The three short-run production stages are conveniently labeled I, II, and III, and are separated by vertical lines extending through both panels. Marginal product eventually turns negative, but average product remains positive. Both curves rise a bit for small quantities of the variable input labor, then decline. The bottom panel contains the marginal product curve (MP) and the average product curve (AP). It generally rises, reaches a peak, then falls. The top panel contains the total product curve (TP). The variable input in this example is labor. A set of product curves is presented in the exhibit to the right. The three stages of short-run production are readily seen with the three product curves- total product, average product, and marginal product.
The third stage is then characterized by negative marginal returns and. The second stage sets it at the peak of average product, experiencing a wide range of decreasing marginal returns, and the law of diminishing marginal returns. The first stage results from increasing average product. Short-run production by a firm typically encounters three distinct stages as a larger amounts of a variable input (especially labor) are added to a fixed input (such as capital). And in Stage III, total product is decreasing. In Stage II, marginal product is positive, but decreasing. In Stage I, average product is positive and increasing. The first stage is characterized by a positive slope of the average product curve, ending at the intersection between the average product and marginal product curves the second stage by continues up to the point in which the marginal product becomes negative, at the peak of the total product curve and the third stage exists over the range of in which the total product curve is negatively sloped. PRODUCTION STAGES: The three stages of production are characterized by the slopes, shapes, and interrelationships of the total, marginal, and average product curves. When combined, both shifts result in an indeterminant change in equilibrium quantity and an increase in equilibrium price. AmosWEB means Economics with a Touch of Whimsy!ĭEMAND INCREASE AND SUPPLY DECREASE: A simultaneous increase in the willingness and ability of buyers to purchase a good at the existing price, illustrated by a rightward shift of the demand curve, and a decrease in the willingness and ability of sellers to sell a good at the existing price, illustrated by a leftward shift of the supply curve.
0 kommentar(er)
