For example if within a month your quantity produced is 7000 units and the number of employees in the production process was 200 then the average product per month is 7000 200 35. Total product is the total amount produced per a set of resources average product is the average cost per unit produced per set of resources. The weighted average SUMPRODUCT formula is.
The concept of the marginal product of labor is important as it can influence major decisions regarding the production level of any company.
We calculate it as. Generally the relationship between total product and factors of production is linear but once a certain point is reached limiting factors begin to set in. Average Product Total Product Units of Variable Factor Input. Now when we have two people working per day and were producing 18 gallons per day our average product as a function of labor is gonna be 18 divided by two which is gonna be nine gallons per worker per day on average.