Short-run production function
Ranges of the production function
The following table and simple production function is based on an imaginary maize farmer. (more)
|Total product rises at an increasing
rate until the 4th unit of labour is employed.
After the 4th unit, total product still rises but at a diminishing rate until the employment of the 8th unit of labour.
The employment of the 9th unit of labour does not contribute anything to total product; no change in the total product takes place.
The employment of the 10th unit of labour causes a decline in total product from 200 to 187.
An important relationship exists between the total product, the average product and the marginal product.
The law of diminishing returns states that as more of a variable input is combined with one or more fixed inputs in a production process, the marginal product of the variable input will eventually decline. The decline in the marginal product of the variable input is followed by a decrease in the average product and lastly by a decrease in the total product. (more)