Fixed Factor of Production One that the firm must employ in a given quantity. Variable factor of Production One that the firm can employ in varying quantities. Short Run A period of time over which some factor are fixed. Run A period of time over which all factors are variable. The quantity of output produced by the firm in a given amount of time.
Total product depends on the quantity of labor the firm hires.
The function that associates to each quantity of labor its total product. Total product divided by the number of workers. Therefore, the average product of labor is increasing and the marginal product exceeds the average product. Therefore, the average product of labor is decreasing and the marginal product is below the average product. In the second stage of production, marginal product lies below average product and average product is falling.