Relationship between AP and TP.
Relationship between TP and AP
- Initially, as more and more units of labour inputs are employed, TP increases at an increasing rate. After this, TP increases but at decreasing rate. Simultaneously, AP continues to rise.
- When TP rises at a decreasing rate and reaches its maximum point, AP falls.
- When TP starts falling at increasing rate, AP also falls but at diminishing rate.
- AP is derived from TP as
- TP can be ascertained from AP by multiplying units of output with AP.