How to Calculate Average Product
Average product equals total product divided by the number of input units: AP = TP ÷ L, the output produced per worker.
The Average Product formula
Calculator
Enter total product and units of labor to get output per worker and how the next hire moves the average.
All the output produced with the current workforce.
The variable input the total product figure belongs to.
Workforce once the extra worker joins.
Output at the larger workforce.
The current workforce turns out 20 units per worker.
- Average product after the hire
- 19
- Marginal product of the added worker
- 13
- Effect on the average
- Average falls
With the extra worker the average moves to 19 units per worker.
The new hire adds 13 units of output.
A worker producing 13 units against an average of 20 pulls the average in that direction, which is why MP cuts AP at its peak.
How to calculate Average Product, step by step
- 1Find total product. The total output produced with that number of workers or units of the variable input.
- 2Count the input units. Use the same input the total product figure belongs to, normally the number of workers.
- 3Divide. AP = TP ÷ L, the output per unit of input.
- 4Compare AP with MP. If the next worker's marginal product is above the current average, AP rises; if it is below, AP falls.
Worked example: Average Product
Six workers produce 120 units, so AP = 120 ÷ 6 = 20 units per worker. Hiring a seventh lifts output to 133, so that worker's MP = 133 − 120 = 13 units and AP = 133 ÷ 7 = 19 units per worker; the below-average worker pulled the average down.
Average Product questions
Where do the MP and AP curves intersect?
At the highest point of the average product curve, because marginal product pulls the average up while it sits above it and drags it down once it falls below.
What is the difference between average product and total product?
Total product is all the output produced; average product is that total divided by the number of input units, so it reads as output per worker.
Can average product rise while marginal product falls?
Yes, as long as MP is still above AP the average keeps rising, even though each extra worker adds less than the one before.
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