Economics · Ch 9 — Production and Costs
Total Product
Total Product
Total Product (TP)
When we study production, we often want to isolate the effect of a single input. To do this, we hold all other inputs fixed and vary only one input — say, labour. For each different level of that variable input, we get a different level of output. This relationship between the variable input and the resulting output, with all other inputs held constant, is called the Total Product (TP) of that variable input.
Think of it as a simple experiment: you have a fixed amount of capital (machines, factory space) and you hire more and more workers. The total output you get from each combination of workers and that fixed capital is the total product of labour.
Total Product is also sometimes called total return or total physical product of the variable input. The word "physical" reminds us that we are measuring actual units of output, not their monetary value.
How the Textbook Builds This Idea
The textbook uses Table 3.1 (which we do not reproduce here, but we can describe its logic). Suppose capital is fixed at 4 units. In that table, you look at the column where capital equals 4. As you move down that column, you read off the output values for different amounts of labour. That entire column — labour values on one side, output values on the other — is the total product of labour schedule when capital is fixed at 4 units.
This schedule is then shown again in the second column of Table 3.2 (again, not reproduced here, but the idea is clear). The key point is that TP is a schedule or a curve: for each quantity of the variable input, it tells you the maximum output that can be produced with that input, given the fixed amounts of other inputs.