We make use of 3 measures of production:
- Total Product - the total output that is generated from the factors of production employed by a business. It is much more difficult to measure intangible assets.
- Average Product - Total Output / Number of units of the variable factor of production employed
- Marginal Product- change in total product when an additional unit of the variable factor of production is employed
Short Run Production Function
- A period of time where at least one factor of production is assumed to be in fixed supply.
- e.g. Land available, Plant and machinery
- It depends on the time scale that…