Average Product

Average product is a measure used in economics to assess how efficiently inputs, like labor or capital, produce output. It is calculated by dividing the total output produced by a specific input by the number of units of that input used. For example, if 10 workers produce 200 units of a product, the average product of labor is 20 units per worker. This helps businesses understand how effectively their resources are being utilized, guiding decisions on scaling production or improving processes to enhance productivity.