ARBITRATION: Intervention of an impartial third party to settle disputes between two others. The decisions of this third party -- the arbitrator -- are legally binding, much like the ruling of a judge in a court of law. Arbitration is commonly used to interpret a collective bargaining agreement between unions and employers. Much like a judge (in some cases it is a judge) an arbitrator determines how a given union and employer conflict stacks up against the terms of existing agreement. Note that an arbitrator doesn't try to decide what's "best, "fair," or mutually agreeable to both sides -- as would be the case with mediation -- but only what's in line with the existing agreement.
MARGINAL PRODUCT CURVE:
A curve that graphically illustrates the relation between marginal product and the quantity of the variable input, holding all other inputs fixed. This curve indicates the incremental change in output at each level of a variable input. The marginal product curve is one of three related curves used in the analysis of the short-run production of a firm. The other two are total product curve and average product curve. The marginal product curve plays in key role in the economic analysis of short-run production by a firm.
The marginal product curve illustrates how marginal product is related to a variable input. While the standard analysis of short-run production relates marginal product to labor, a marginal product curve can be constructed for any variable input.
Marginal Product Curve
The diagram to the right graphically represents the relation between marginal product and the variable input. This particular curve is derived from the hourly production of Super Deluxe TexMex Gargantuan Tacos (with sour cream and jalapeno peppers) as Waldo's TexMex Taco World restaurant employs additional workers. The number of workers, measured on the horizontal axis, ranges from 0 to 10 and the marginal Gargantuan Taco production of each extra worker, measured on the vertical axis, ranges from 0 to 30.
The shape of this marginal product curve is worth noting. For the first two workers of variable input, marginal product increases, as each added worker contributes more to the total production of Gargantuan Tacos than previous workers. This increasing marginal product is reflected in a positive slope of the marginal product curve.
Beyond the third worker, the marginal product declines, as each added worker contributes less to the total production of Gargantuan Tacos than the previous worker. This decreasing marginal product is seen as a negative slope. The marginal product eventually declines until it reaches zero and even becomes negative. This results as the marginal product curve cuts through the horizontal axis.
The hump-shape of the marginal product curve embodies the essence of the analysis of short-run production. The upward-sloping portion of the marginal product curve, up to the third worker, is due to increasing marginal returns. Decreasing marginal returns sets in after the marginal product curve peaks with the second worker and declines for the third worker. In particular, this declining segment of the marginal product curve reflects the law of diminishing marginal returns.
<= MARGINAL PRODUCT MARGINAL PRODUCTIVITY THEORY =>
MARGINAL PRODUCT CURVE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2019. [Accessed: July 17, 2019].
Check Out These Related Terms...
| total product | marginal product | average product | total product curve | average product curve | production function | law of diminishing marginal returns | marginal returns | production stages |
Or For A Little Background...
| short-run production analysis | production | production cost | variables | labor | capital | supply | principle | business | economic analysis | marginal analysis | factors of production | microeconomics |
And For Further Study...
| long-run production analysis | production possibilities | production inputs | production time periods | total product and marginal product | total product and average product | average product and marginal product | marginal utility curve | marginal cost curve | long-run marginal cost |
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