Total Product (TP)
Total Product (TP) is the total amount of output produced by a firm by using all the factors of production. It is also known as Total Physical Product (TPP).

For example, a factory produces 1000 units of a product using labor, capital, and raw materials. The 1000 units is the TP of the factory.

Marginal Product (MP)
The Marginal Product (MP) is the additional output produced by using one more unit of a particular input, while holding other inputs constant.

For example, if a factory produces 1000 units of a product using 10 workers and then produces 1100 units using 11 workers, the marginal product of the 11th worker is 100 units.

Average Product (AP)
Average Product (AP) is the output produced per unit of input. It is calculated by dividing the total product by the number of units of input used.

For example, if a factory produces 1000 units of a product using 10 workers, the average product of labor is 100 units per worker.



- When the Marginal Product (MP) is greater than the Average Product (AP), the AP increases.
- When the MP is equal to AP, the AP is at its maximum.
- When the MP is less than the AP, the AP decreases.

For example, if a factory produces 1000 units of a product using 10 workers, the average product of labor is 100 units per worker. If the factory hires one more worker and produces 1100 units, the marginal product of labor is 100 units. The AP of labor will increase if the 11th worker produces more than 100 units. If the 11th worker produces exactly 100 units, the AP of labor will remain the same. If the 11th worker produces less than 100 units, the AP of labor will decrease.