1. Average product is the output per worker
A Production Table
# of workers
Total Output
Marginal Product
Average Product 4 6 7 5 3 1 -2 -5
--- 2 10 17
5.7 23
5.8 28
5.6 31
5.2 32
4.6 8
4.0 9 30
3.3 25
2.5
Average product is the output per worker
Marginal product is the additional output that will be forthcoming from an additional worker, other inputs constant

2. Law of Diminishing Marginal Productivity
Law of diminishing marginal productivity states as more of a variable input is added to an existing fixed input, after some point the additional output from the additional input will fall
# of workers
Total Output
Marginal Product
Average Product 4 6 7 5 3 1 -2 -5
--- 2 10 17
5.7 23
5.8 28
5.6 31
5.2 32
4.6 8
4.0 9 30
3.3 25
2.5
Increasing
marginal productivity
Diminishing
marginal productivity
Diminishing
Absolute productivity

3. Graphing a Production FunctionQ 32 26 20 14 8 2
A production function is the relationship between the inputs and the outputs TP
Number of workers
Increasing
marginal productivity
Diminishing
marginal productivity
Diminishing
Absolute productivity

4. Graphing Marginal and Average ProductivityQ
Then marginal productivity declines
Eventually marginal productivity is negative
Marginal productivity first increases 8 6 4 2 -2 -4 -6 AP
Number of workers MP
Diminishing
marginal productivity
Diminishing
Absolute productivity
Increasing
marginal productivity

5. Costs of Production Table
Output
FC ($)
VC ($)
TC ($)
MC ($)
AFC ($)
AVC ($)
ATC ($) 3 50 38 88 12
16.67
12.66
29.33 4
100
12.50
25.00 9
150 8
5.56
11.11 10
108
158
5.00
10.80
15.80 16
200 7
3.12
9.38 17
157
207
2.94
9.24
12.18 22
250
2.27
9.09
11.36 23
210
260
2.17
9.13
11.30 27
255
305 15
1.85
9.44
11.29 28
270
320
1.79
9.64
11.43 32
400
450
1.56
14.06

6. Graphing Total Cost Curves
TC and VC curves increase as Q increases
(TC = FC + VC) TC •
$450 VC •
400 L •
158 • O
FC curve is constant
108 • M FC 50 Q 10 32

7. Graphing Per Unit Output Cost Curves30 20 10
MC, ATC, and AVC curves are U-shaped MC
ATC
AVC
AFC curve decreases
AFC Q

8. The Relationship Between Marginal Productivity and Marginal Costs
Costs per unit MC
AVC
If marginal productivity is rising, marginal costs are falling Q
Output per worker
If average productivity is falling, average costs are rising
AP of workers
MP of workers Q

9. The Relationship Between Marginal Cost and Average Cost
Costs per unit
The marginal cost curve goes through the minimum point of both the ATC and AVC curves MC
ATC
AVC Q