EEFA - RETURN TO FACTOR - FINAL YEAR CS/IT - SRI SAIRAM INSTITUTE OF TECHNOLOGY - DR,K,BARANIDHARAN
218 August 2013
Return to factors
Returns to factors are also called
Productivity is the ratio of output to
Factors productivity refers to the
short-run-relationship of input
The change of productivity can be measured in
A)TOTAL PRODUCTIVITY: the total output
generated at varied levels of input of a particular
factor (while other factor remain constent) is called
the total physical product.
B)AVERAGE PRODUCTIVITY: the total physical
product divided by the number of that particular
factor used ‘yields average productivity.
C)MARGINAL PRODUCTIVITY: the marginal
physical product is the additional output generated
by adding an additional unit of the factor under
study, keeping the other factors constant
The “returns to factors” is also governed
by the laws of returns to scale.
The total physical product increase with
an increase in inputs.
However, the rate of increase is varied, not
To began with, the total physical product
increase at an increasing rate because of
the Law of Increasing Returns to
scale, and later decline of the Law of
Decreasing Return to Scale