Concept of Production Function
Production:Production is the process of creating utility in goods and services or process of transforming inputs into output. Concept of Production Function:In simple words, production function ref...
Marginal Poduct(MP)
Marginal Product is the change in the total product due to change in the variable facto. In other words, marginal product is the addition to the total product by the employment of an additional unit of variable factor.
MP= TPn - TPn-1
Where,
MP= Marginal Product
n= Number of labour units
TP= Total Product
Marginal Product Curve
Initially, the MP curve rises, reaches a maximum point, and then begins to decline. When TP is maximum, MP is zero. When TP falls, MP is negative. It can be explained with an MP schedule given in the table below:
| Units of labour(L) | Total Product(TP) | Marginal Product(MP) |
| 0 | 0 | 0 |
| 1 | 10 | 10 |
| 2 | 30 | 20 |
| 3 | 60 | 30 |
| 4 | 80 | 20 |
| 5 | 90 | 10 |
| 6 | 90 | 0 |
| 7 | 80 | -10 |
In the above table, initially the value of MP increases till the employment of the 3rd unit of labour, then the value of MP begins to decline. It becomes zero with employment of 6th unit of labour and becomes negative after that. It can also be explained with the help of the figure below:
In the above figure, units of labour are shown on the X-axis and the marginal product is shown on the Y-axis. MP curve increases in the initial stage of production, becomes maximum at the point A, and then declines. It becomes zero when the 6th unit of labour is employed. If the units of labour are increased beyond the 6th unit, marginal product curve will become negative.
