Find the marginal product.

Labour	Total Product	Marginal Product
1	10	10
2	28	?
3	40	?
4	50	?

The correct answer is 18, 12 and 10.Key Points

• Marginal product is the increase in output that results from increasing one unit of input while holding all other inputs constant.
• To find the marginal product, we need to calculate the difference in total product between each successive level of labor input.
• The difference in total product between 1 and 2 units of labor is 28 - 10 = 18.
  • Therefore, the marginal product of the second unit of labor is 18.
• The difference in total product between 2 and 3 units of labor is 40 - 28 = 12.
  • Therefore, the marginal product of the third unit of labor is 12.
• The difference in total product between 3 and 4 units of labor is 50 - 40 = 10.
  • Therefore, the marginal product of the fourth unit of labor is 10.​
• ​The marginal product is:​

Additional InformationLaw of Diminishing Returns:

• It states that as more and more units of a variable input (such as labor) are added to a fixed amount of other inputs (such as capital), the marginal product of the variable input will eventually decrease.
• The classic application of this law is in farming.
  • In order to enhance crop yields, farmers often have a limited amount of land that they can work with an endless number of workers.
  • There is a threshold, nevertheless, beyond which the addition of one worker does not result in a greater rise in crop yields than the previous addition.
  • At this point the law of diminishing returns has set in and the farm is less efficient than it was before that additional worker was employed.