Marginal product

In economics and in particular neoclassical economics, the marginal product or marginal physical productivity of an input (factor of production) is the change in output resulting from employing one more unit of a particular input (for instance, the change in output when a firm's labor is increased from five to six units), assuming that the quantities of other inputs are kept constant.

As more and more of variable input (labor) is employed, marginal product starts to fall.

Finally, after a certain point, the marginal product becomes negative, implying that the additional unit of labor has decreased the output, rather than increasing it.

In the neoclassical theory of competitive markets, the marginal product of labor equals the real wage.

(2) As more and more quantities of the variable inputs are employed, TPP increases at a diminishing rate.