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Assumptions of production function

The production function is based on following assumptions:
  • It relates to a particular point of time
  • ƒThe technical knowledge during that period of time remains constant
  • ƒThe producer uses the best technique available
  • ƒThe factors of production are divisible into most viable units
To understand the different stages of the production functions, it is essential to understand some important terms.

Total product (TP)

Total Product is defined as the total quantity of goods and services produced by a firm with the given inputs, during a specified period of time.
In the short run, total product can be increased by employing more units of a variable factor, whereas, in the long run, all the factors can be increased.

Average product (AP)

AP is defined as the amount of output produced per unit of the variable factor i.e.
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Marginal product (MP)

MP is defined as the change in TP resulting from the employment of an additional unit of a variable factor. Symbolically, MP = TPn - TPn-1 {difference between total product of the present and total product of the previous}.
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