average physical product
average physical productthe average OUTPUT in the SHORT-RUN theory of supply produced by each extra unit of VARIABLE FACTOR INPUT (in conjunction with a given amount of FIXED FACTOR INPUT). This is calculated by dividing the total quantity of OUTPUT produced by the number of units of input used. In the SHORT RUN theory of supply, average physical product, together with AVERAGE REVENUE per unit of output, indicates to a firm how many factor inputs to employ in order to maximize profit.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005