(8th edition) (the pearson series in economics) robert pindyck, daniel rubinfeld microecon 233

208 PART 2 • Producers, Consumers, and Competitive Markets

Output
per
month

D

112

F IGURE 6.1

C

Total Product

PRODUCTION WITH ONE
VARIABLE INPUT
The total product curve in (a) shows the output
produced for different amounts of labor input.
The average and marginal products in (b) can be
obtained (using the data in Table 6.1) from the
total product curve. At point A in (a), the marginal product is 20 because the tangent to the
total product curve has a slope of 20. At point B
in (a) the average product of labor is 20, which is
the slope of the line from the origin to B. The
average product of labor at point C in (a) is given by the slope of the line 0C. To the left of point
E in (b), the marginal product is above the average product and the average is increasing; to
the right of E, the marginal product is below the
average product and the average is decreasing.
As a result, E represents the point at which the

average and marginal products are equal, when
the average product reaches its maximum.

B

60

A

0

1

2

3

4

5

6

7

8

9

10

Labor per Month
(a)
30

Output
per
worker 20
per
month

E
Average Product

10

Marginal Product
0

1

2

3

4

5

6

(b)

7

8

9

10

Labor per month

We have seen that the marginal product is above the average product when
the average product is increasing and below the average product when the average product is decreasing. It follows, therefore, that the marginal product must
equal the average product when the average product reaches its maximum. This
happens at point E in Figure 6.1 (b).
Why, in practice, should we expect the marginal product curve to rise and
then fall? Think of a television assembly plant. Fewer than ten workers might
be insufficient to operate the assembly line at all. Ten to fifteen workers might
be able to run the assembly line, but not very efficiently. If adding a few more
workers allowed the assembly line to operate much more efficiently, the marginal product of those workers would be very high. This added efficiency,
however, might start to diminish once there were more than 20 workers. The
marginal product of the twenty-second worker, for example, might still be very
high (and above the average product), but not as high as the marginal product
of the nineteenth or twentieth worker. The marginal product of the twenty-fifth
worker might be lower still, perhaps equal to the average product. With 30
workers, adding one more worker would yield more output, but not very