PROFESSIONAL SCHOOLS

UNIVERSITY OF MINDANAO

Name: Leonin, Jay Ann C. Score/Rating _______

MSE 101: Microeconomics Prof Dr S.B. Antipolo

PROBLEM SET #1
PRODUCTION FUNCTIONS

Given the following hypothetical data on Input (X) and Total Physical Product (TPP) of
XYZ Corporation:

Input (X) Total Physical Average Physical Marginal Physical

Product (TPP) Product (APP) Product (MPP)
0 0 0 0
2 6 3 3
4 14 3.5 4
6 24 4 5
8 32 4 4
10 38 3.8 3
12 42 3.5 2
14 44 3.14 1
16 44 2.75 0
18 42 2.33 -1
20 30 1.5 -6

Requirements:

1. Compute for the Average Physical Product (APP) and Marginal Physical Product (MPP).
Note: Please enter your computed values in Column 3 and Column 4, respectively.

Input (X) Total Physical Average Physical Marginal Physical

Product (TPP) Product (APP) Product (MPP)
0 0 0 0
2 6 3 3
4 14 3.5 4
6 24 4 5
8 32 4 4
10 38 3.8 3
12 42 3.5 2
14 44 3.14 1
16 44 2.75 0
18 42 2.33 -1
 20 30 1.5 -6

2. From the computed values above, show the relationship(s) between and among the
TPP, APP and MPP. What is the significance of these relationships to Business Firms/
Corporate Governance.

The MPP represents the slope or rate of change in the production function. The
production function itself is sometimes referred to as total physical product (or TPP)
function. The MPP function refers to the function representing the rate of change in the
TPP function. The significance is Each business is different. The relationship between
productivity (output) and the quantity of input is different for each business..

3. Show geometrically or graphically the three regions of production using the TPP,
APP, and MPP. In addition, indicate the point of inflection in the TPP, APP, and MPP
curves. What is the significance of the point of inflection in business production
management? Discuss briefly.