Average product is per unit product of the variable factor. In other words, average product is obtained by dividing total product by the total units of variable factor used. Thus,
AP= Average Product
TP= Total Product
Initially, AP increases at a slower rate , becomes maximum, and diminishes.
Average Product Curve
AP curve begins from the origin. As the units of variable factors are increased, it increases at a decreasing rate, reaches a maximum point, and the begins to decline. AP curve is inverted U-shaped. As long as TP is positive, AP is positive. It can be illustrated with the help of an AP schedule given in the table below:
|Units of Labour(L)||Total Product(TP)||Average Product(AP)|
In the figure, units of labour are shown on the X-axis and average product on the Y-axis. AP increases up to the point A and it and it is stable at the point B. Thereafter, it declines. So, it takes an inverted U shape.