Question

Explain the relation between marginal product and total product with the help of a diagram.

Explain with the help of a diagram, the relationship between total product and marginal product.

Answer 1

The relationship between marginal product and total product is explained under the law of variable proportions, which analyses output behaviour when only one input (usually labour) is varied while others remain fixed.

Answer 2

Relationship between total product (TP) and marginal product (MP)

1. When MP is rising:
   1. TP increases at an increasing rate.
   2. Each additional unit of the variable factor contributes more to total output than the previous one.
   3. This occurs in the first stage (increasing returns to the variable factor).
2. When MP is positive but falling:
   1. TP continues to increase, but at a diminishing rate.
   2. Each new unit adds less to total output than the previous one.
   3. This occurs in the second stage (diminishing returns).
3. When MP = 0:
   1. TP is at its maximum.
   2. Any further addition of the variable factor will not increase total output.
4. When MP is negative:
   1. TP starts to decline.
   2. Additional units of the variable factor actually reduce the total output.
   3. This occurs in the third stage (negative returns).