Home / Aptitude Tests / Economics / By adding all the ma...

By adding all the marginal products at each level of empl...

By adding all the marginal products at each level of employment of the variable input, we obtain a value equal to 

A.

Average product

B.

Total product

C.

Average variable cost

D.

Total cost

Correct answer is B

Total product is the overall quantity of output that a firm produces, usually specified in relation to a variable input. Total product is the starting point for the analysis of short-run production. It indicates how much output a firm can produce according to the law of diminishing marginal returns.

Marginal Product (MP) = Change in Total Product / Change in Variable Factor

Total Product (TP) = AP X Variable Factor