Production inProduction inthe Short Runthe Short Run

Short-run productionShort-run production

Total physical product (TPP)

Total physical product (TPP)

0

10

20

30

40

0 1 2 3 4 5 6 7 8

Number of farm workers

Wheat production per year from a particular farmWheat production per year from a particular farmT

onn

es

of w

he

at p

rod

uce

d p

er

yea

r

Number of workers

012345678

TPP 0 310243640424240

0

10

20

30

40

0 1 2 3 4 5 6 7 8

Number of farm workers

Wheat production per year from a particular farmWheat production per year from a particular farmT

onn

es

of w

he

at p

rod

uce

d p

er

yea

r

Number of workers

012345678

TPP 0 310243640424240

The law of diminishingThe law of diminishing(marginal) returns(marginal) returns

A more units of the variable

factor are used, there will come

a point where additional units of

the variable factor will produce

less than previous units.

A more units of the variable

factor are used, there will come

a point where additional units of

the variable factor will produce

less than previous units.

0

10

20

30

40

0 1 2 3 4 5 6 7 8

Wheat production per year from a particular farmWheat production per year from a particular farm

Number of farm workers

To

nne

s o

f wh

eat

pro

du

ced

pe

r ye

ar TPP

b

Diminishing returnsset in here

d

Maximum output

Short-run productionShort-run production

Marginal physical product (MPP)

= TPP/Qf

Marginal physical product (MPP)

= TPP/Qf

-2

0

2

4

6

8

10

12

14

0 1 2 3 4 5 6 7 8

0

10

20

30

40

0 1 2 3 4 5 6 7 8

Wheat production per year from a particular farmWheat production per year from a particular farm

Number offarm workers (L)

Ton

nes

of w

heat

per

yea

r

TPP

Ton

nes

of w

heat

per

yea

r

Number offarm workers (L)

TPP = 7

L = 1

MPP = TPP / L = 7

0

10

20

30

40

0 1 2 3 4 5 6 7 8

-2

0

2

4

6

8

10

12

14

0 1 2 3 4 5 6 7 8

Wheat production per year from a particular farmWheat production per year from a particular farm

Ton

nes

of w

heat

per

yea

r

TPP

Ton

nes

of w

heat

per

yea

r

MPP

Number offarm workers (L)

Number offarm workers (L)

Short-run productionShort-run production

Average physical product (APP)

= TPP/Qf

Average physical product (APP)

= TPP/Qf

0

10

20

30

40

0 1 2 3 4 5 6 7 8

-2

0

2

4

6

8

10

12

14

0 1 2 3 4 5 6 7 8

Wheat production per year from a particular farmWheat production per year from a particular farm

Ton

nes

of w

heat

per

yea

r

TPP

Ton

nes

of w

heat

per

yea

r

MPP

Number offarm workers (L)

Number offarm workers (L)

0

10

20

30

40

0 1 2 3 4 5 6 7 8

-2

0

2

4

6

8

10

12

14

0 1 2 3 4 5 6 7 8

Wheat production per year from a particular farmWheat production per year from a particular farm

Ton

nes

of w

heat

per

yea

r

TPP

Ton

nes

of w

heat

per

yea

r

APP

MPP

APP = TPP / L

Number offarm workers (L)

Number offarm workers (L)

0

10

20

30

40

0 1 2 3 4 5 6 7 8

-2

0

2

4

6

8

10

12

14

0 1 2 3 4 5 6 7 8

b

b

Wheat production per year from a particular farmWheat production per year from a particular farm

Ton

nes

of w

heat

per

yea

r

TPP

Ton

nes

of w

heat

per

yea

r

APP

MPP

Diminishing returnsset in here

Number offarm workers (L)

Number offarm workers (L)

0

10

20

30

40

0 1 2 3 4 5 6 7 8

-2

0

2

4

6

8

10

12

14

0 1 2 3 4 5 6 7 8

Wheat production per year from a particular farmWheat production per year from a particular farm

Ton

nes

of w

heat

per

yea

r

TPP

Ton

nes

of w

heat

per

yea

r

APP

MPP

b

d

d

Number offarm workers (L)

Number offarm workers (L)

Maximumoutput

b

c

c

0

10

20

30

40

0 1 2 3 4 5 6 7 8

-2

0

2

4

6

8

10

12

14

0 1 2 3 4 5 6 7 8

Wheat production per year from a particular farmWheat production per year from a particular farm

Ton

nes

of w

heat

per

yea

r

TPP

Ton

nes

of w

heat

per

yea

r

APP

MPP

b

b

d

d

Number offarm workers (L)

Number offarm workers (L)

Slope = TPP / L= APP