Total, average and marginal product
The output added by each extra unit of labour first grows, then shrinks; while it stays positive, total output keeps rising. Move labour and watch the tangent and the ray.
A teaching model — not a real plant’s production function; units are notional.
Diminishing marginal product — the addition shrinks but is still positive, so total output keeps rising
Each extra unit of labour adds some output (marginal product). At first the addition grows, then it shrinks; while still positive, total output keeps rising. Marginal product pulls the average up when above it and down when below, so they meet at the top of the average.
Tangent (slope = MP) Ray (slope = AP) MP AP ★ MP = AP (top of AP)
Bands: increasing diminishing (TP still rising) MP < 0 (TP falling)
Model assumption: TP = 4L + 1.5L² − 0.05L³. The curve shapes and diminishing returns are in the study guide; the cubic and "MP crosses the top of AP" are learning supplements. Diminishing marginal product (labour only, short run) is not decreasing returns to scale (all inputs, long run).
Not in this calculation
- Shifting the whole curve by changing capital (long run)
- Changing two inputs together — see the isoquant tool
- Costs — turning marginal product into marginal cost
- Wages and prices
- Any real plant’s input–output curve
Using the example values
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