Analysing the Relationship Between Marginal Product and Total Product

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Resource allocation: It helps in identifying the efficient allocation of resources and helps to determine which input is contributing towards making the most of the outputs.
Investment decisions: Marginal products help businesses know where to invest in additional resources and the areas of production that can benefit from any other investments.
Maximising profits: It aims to equalise the marginal product of an input with its cost by using inputs optimally and maximising profits.
Identify production capacity: Marginal product guides businesses to understand their production capacity by helping them to make decisions like scaling up or down production as per marginal returns.
Cost management: It makes sure that the cost of an extra input does not kenya phone number list increase the revenue generated by its marginal product.
Pricing strategies: It influences the pricing and costing strategies by understanding the cost that is associated with additional production and helping in setting up competitive prices to maintain profits.

The relationship between marginal product (MP) and total product (TP) is important for analysing the production process and making informed decisions for sellers. The relationship between marginal product and total product can help you identify the efficiency of input and understand the stages. Before looking at their relationship, let us first understand what marginal product and total product mean:

Total product (TP): it is the total quantity of the output produced by a company using different combinations of inputs. It is the result of all the inputs used to get the output.
Marginal product (MP): It is the additional output that is generated by using one or more units of inputs while keeping other inputs constant. It is calculated as per the change in the total product output by changing an input quantity.