Economics Cost Of Production Questions Medium
The concept of average product in production refers to the average amount of output produced per unit of input. It is calculated by dividing the total output by the total units of input used in the production process. Average product is a measure of productivity and efficiency, indicating how efficiently inputs are being utilized to generate output. It helps firms determine the optimal level of input usage to maximize production and minimize costs. As the average product increases, it signifies that each additional unit of input is contributing more to the overall output, indicating increasing returns to scale. Conversely, if the average product decreases, it suggests diminishing returns to scale, where each additional unit of input contributes less to the overall output.