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Production and cost — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsProduction and cost3 Marks
Question
Define production function. State the relation between marginal product and average product.
Or
Explain the relationship between marginal product and average product.
✓

Answer

A production function: expresses the technical relationship between inputs and output of a firm. It tells the maximum quantity of output that can be produced with any given quantity of inputs. If there are two factor inputs, labour (L) and capital (K), then the production function can be written as
O = f(L, K)
Where O is the quantity of output and L, K are the units of labour and capital, i.e., inputs.
MP determines the behaviour of AP. The relationship between MP and AP is as follows:
  1. When MP > AP, then AP is rising.
  2. When MP = AP, then AP is constant and maximum.
  3. When MP < AP, then AP falls.

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