Three Stages of Production

When a variable input (like labor) is increased, output behaves differently in three stages.

• Total Product (TP): Rises quickly, first faster and then slower.
• Marginal Product (MP): Rises to a maximum, then falls but stays positive.
• Average Product (AP): Goes up throughout this stage, reaching its highest point.
• Real-Life Analogy: Adding workers to a small bakery—more hands make more bread, but after a point, the kitchen gets crowded.
• Key Takeaway:
  More inputs increase output, but the boost slows down after a while.

• TP: Still rises but much more slowly, reaching a maximum.
• MP: Falls steadily; hits zero at the stage’s end.
• AP: Drops but stays above zero.
• Analogy: The bakery becomes crowded—adding more workers slows everyone down and gains decrease.
• Key Takeaway:
  Best stage for production—output rises, but gains from new workers shrink.

• TP: Starts falling.
• MP: Becomes negative.
• AP: Falls, but always stays positive.
• Analogy: Too many cooks spoil the broth—extra workers actually lower total output.
• Key Takeaway:
  Adding more input now hurts production.