Relationship between Total Product (TP) and Marginal Product (MP)

Total quantity of output produced by using given units of a variable input (like number of workers) with fixed inputs.

Extra output produced when one more unit of a variable input is used, keeping other inputs fixed.

1. When TP increases at an increasing rate

• In the beginning, as more workers are employed, TP rises faster and faster.
• In this stage, MP is rising, because each extra worker adds more output than the previous worker.

Reason (intuitive):
Workers can specialise and divide work, so efficiency improves.

2. When TP increases at a diminishing (decreasing) rate

• After some point, TP still increases, but the speed of increase slows down.
• Here, MP is falling but still positive.

• • TP is rising, but each new worker adds less extra output than the earlier worker.

Reason:
Fixed factors (like machines or space) start limiting production; workers have to share tools, so productivity per extra worker falls.

3. When TP is maximum

• At a particular level of employment, TP reaches its highest point.
• At this point, MP = 0.

• • An extra worker does not increase total output.

Interpretation:
The firm is using its variable input just up to the point where extra input neither increases nor decreases output.

4. When TP starts to fall

• If more workers are added beyond the maximum TP point, total output starts falling.
• In this stage, MP is negative.

• • An extra worker reduces total output (for example, due to overcrowding, confusion, or mismanagement).

• MP rising → TP rises at an increasing rate.
• MP falling but positive → TP rises at a diminishing rate.
• MP = 0 → TP is maximum (no change in TP).
• MP negative → TP falls.

You can use a small example like this (numbers only for illustration):

From such a table you can observe: when MP rises, TP becomes steeper; when MP falls but positive, TP becomes flatter; when MP is zero, TP is at maximum; when MP is negative, TP falls.​

In your notebook, draw:

1] Axes

• Horizontal axis: Labour (L) or units of variable input.
• Vertical axis: Output (for TP) and MP.

2] TP curve

• Starts from origin.
• First part: convex (steepening) – TP rises at an increasing rate.
• Middle part: concave (flattening) – TP rises at a diminishing rate.
• Highest point: TP max.
• After that: slopes downward – TP falls.

3] MP curve

• Starts positive, rises, then falls.
• MP is highest when TP switches from increasing at an increasing rate to increasing at a diminishing rate.
• MP cuts the horizontal axis exactly where TP is maximum (MP = 0).
• MP lies below the horizontal axis when TP is falling (negative MP).

Imagine a small furniture workshop making tables:

With 1–3 workers, they divide tasks (cutting, polishing, assembling).

• Specialisation makes each added worker very productive.
• MP rises, so TP rises at an increasing rate.

With 4–6 workers, space and tools become limited.

• Each new worker still increases total output, but by less than before.
• MP falls but is positive, so TP rises at a diminishing rate.

With 7 workers, the workshop is fully used.

• One more worker adds no extra output.
• MP = 0, TP is maximum.

With 8 workers, the place is overcrowded.

• Workers disturb each other; output actually falls.
• MP becomes negative, and TP starts decreasing.

• TP = total output; MP = extra output from one extra unit of input.
• MP is the rate of change (slope) of TP.
• Rising MP → TP rises faster (increasing rate).
• Falling but positive MP → TP still rises but more slowly (diminishing rate).
• MP = 0 → TP at its maximum level.
• MP negative → TP falls as more input is added.