Total Product vs Average Product
Total Product and Average Product are two Production & Costs concepts in AP Economics that students often mix up. Total Product is the total quantity of output produced by a firm using a given amount of inputs in a specific time period. Average Product is the total output produced per unit of a variable input, typically labor. Here is how they compare side by side.
It increases as more variable inputs, like labor, are added to fixed inputs, like capital. Initially, total product rises at an increasing rate due to specialization, then at a decreasing rate due to diminishing returns.
It is found by dividing total product by the quantity of the variable input used. Average product rises when marginal product is above it and falls when marginal product is below it.
Total Product vs Average Product: All the Output and the Output per Worker
| Total Product (TP) | Average Product (AP) | |
|---|---|---|
| What it counts | Every unit produced with a given quantity of inputs | Output divided by the number of variable input units |
| Formula | TP = the output level at a given input level | AP = TP divided by L |
| Shape as labor is added | Rises, flattens, and can eventually fall | Rises to a peak and then falls |
| Where its maximum sits | At the worker whose marginal product has fallen to zero | At the worker where marginal product crosses it from above |
| What its geometry gives you | The slope at a point on the TP curve is marginal product | The slope of a ray from the origin to the TP curve is average product |
| What a manager reads from it | Whether the plant can fill an order at all | How productive the workforce is per head |
Total output can rise on the very hire that drags productivity down
A packing line keeps its machinery fixed and adds workers. Total product runs 12, 30, 48, 60, 66 and 66 units for one through six workers. Divide each figure by the number of workers and average product reads 12, 15, 16, 15, 13.2 and 11 units. Marginal product, the difference between consecutive totals, reads 12 for the first worker, 18 for the second and third, then 12, then 6, then 0. Look at what happens on the fourth hire. Total product climbs from 48 to 60 units, so the firm is producing more than before and would accept a larger order. Average product falls from 16 to 15 units, so the workforce is less productive per head. Both statements are true at once, and a question asking whether the fourth worker helped depends entirely on which measure is meant. The sixth worker adds nothing at all, marginal product is zero, and total product stops at 66 units, its highest value in the table. Average product by then has fallen to 11 units. You can run the division on your own data at /calculate/average-product. The numbers are illustrative.
Average product peaks where marginal product cuts through it, not where total product peaks
The two maximums land in different places and the reason is the same marginal average logic that governs cost curves. Average product rises while the incoming worker produces more than the current average and falls once the incoming worker produces less. In the table above marginal product is 18 units for the second and third workers while average product is only 15 or 16, so the average climbs. From the fourth worker on, marginal product of 12 units sits below the average of 16, so the average slides. Average product therefore peaks at three workers. Total product does something else entirely: it keeps rising as long as marginal product is positive, and only stops when marginal product reaches zero at the sixth worker. So average product peaked three hires before total product did. In a discrete table the crossing rarely lands exactly on a whole worker, which is why textbook diagrams show marginal product cutting average product neatly at the peak while a table shows the switch happening between two rows. See /glossary/marginal-product for the column that drives both.
Frequently asked questions
What is the difference between total product and average product?
Total product is the whole quantity of output produced at a given level of inputs, while average product is that total divided by the number of variable input units, usually workers. Total product answers how much comes out and average product answers how much each worker accounts for.
When is average product at its maximum?
Average product peaks at the point where marginal product crosses it from above, meaning the last worker adds exactly what the existing workers average. Before that point marginal product is higher than average product and pulls it up, and after it marginal product is lower and pulls it down.
Can total product rise while average product falls?
Yes, and it happens over a wide range of hiring. As long as a new worker adds some output, total product rises, but if that worker adds less than the current average then average product falls at the same time.
Live Production Costs graph. Drag the curves, or open the full version.
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