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Explain the relationship between MP and TP.

Asked by Topperlearning User 25th April 2016, 2:13 PM
Answered by Expert
Answer:

Here the table and the diagram below shows the following relationship between MP and TP:

  • Till the third unit of variable factor, MP increases from 4 to 28 units and the TP increases for every additional unit. So long as MP is increasing, TP is increasing at increasing rate.
  • But when MP starts diminishing at the 4th unit of variable factor input and the TP increases only at a decreasing rate.
  • When 7th unit was applied, MP is zero, there is no addition to TP and TP is at maximum level.
  • When MP is negative, TP starts declining at the 8th unit. TP diminish from 84 to 80 and the MP is negative -4.

 

Units of Fixed Factor

Units of Variable Factor

TP

MP

1

0

0

0

1

1

4

4

1

2

20

16

1

3

48

28

1

4

68

20

1

5

80

10

1

6

84

4

1

7

84

0 

1

8

80

-4

 

  

 

  

Answered by Expert 25th April 2016, 4:13 PM
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