Inputs and Outputs of Production

Overview

Description

When looking at how inputs (factors of production) are combined to make products (outputs), there is the short run, which is the time when one or more inputs remain fixed, and the long run, which is the time when all inputs can vary. When one input is increased while the others are held constant (fixed), the resulting rise in total product can be shown as an S-shaped curve in which the marginal product (the extra output from adding one unit of the input) rises quickly, reaches a maximum, then falls. Average product reaches a peak when it crosses the marginal product curve.

At A Glance