

How to Calculate Marginal Product with Formula and Example
The marginal product formula is an important concept in Economics that helps measure the extra output produced when you add one more unit of an input like labor. This topic is highly relevant for students appearing in Class 11 and Class 12 board exams, competitive exams, and also for anyone who wants to understand productivity in daily business situations.
Term | Definition | Formula |
---|---|---|
Total Product (TP) | Total output produced using a given input | Sum of all output units |
Marginal Product (MP) | Extra output by adding one more input unit | MP = TPn – TPn-1 |
Average Product (AP) | Output per unit of input | AP = TP / Number of Inputs |
Marginal Product Formula
The marginal product formula helps quantify the additional output received from an extra input. The standard formula is:
MP = TPn – TPn-1, where:
- MP = Marginal Product
- TPn = Total product after adding an extra input
- TPn-1 = Total product before adding the extra input
This formula is frequently used in both Class 11 and Class 12 Economics exams and is a core part of questions on production and productivity.
How to Calculate Marginal Product: Step-by-Step Example
Let's see how to use the marginal product formula with real numbers. Suppose a factory uses workers (labor) to make products:
Units of Labor | Total Product (TP) | Marginal Product (MP) |
---|---|---|
1 | 10 | – |
2 | 25 | 25 – 10 = 15 |
3 | 35 | 35 – 25 = 10 |
4 | 40 | 40 – 35 = 5 |
5 | 38 | 38 – 40 = -2 |
- Step 1: Note the total product before and after an input increases.
- Step 2: Subtract the previous total product from the current one.
- Step 3: MP can decrease, rise, or even be negative depending on efficiency.
You may also use the marginal product calculator or Microsoft Excel for bulk calculations during practice or examinations.
Marginal Product vs. Average Product vs. Total Product
It's easy to confuse these three terms. Here's a quick comparison:
Aspect | Total Product (TP) | Average Product (AP) | Marginal Product (MP) |
---|---|---|---|
Meaning | Total output from all units of input | Output per input unit | Extra output from one more input |
Formula | Sum of all output | TP / Input units | TPn – TPn-1 |
Example (using table above) | 35 units (at 3 labor) | 35/3 = 11.67 | 10 (from 2 to 3 labor) |
Make sure to review the differences for MCQs or short answer questions, and see the full explanation at Total Product, Average Product, and Marginal Product.
Importance and Applications of Marginal Product Formula
Understanding the marginal product formula helps in multiple ways:
- It helps businesses find the most efficient use of resources.
- In cost analysis, it shows how adding more labor or machinery changes cost per unit.
- It's key to understanding the Law of Variable Proportion and diminishing returns.
- Exam questions for Class 11, Class 12, and competitive exams often test your conceptual clarity here.
- It guides optimal staffing, budgeting, and production decisions in real businesses.
For diagram-based explanations and law-based theory, also visit Shapes of Total Product, Average Product, and Marginal Product.
Key Points and Revision Tips for Marginal Product
- Always use the change in total product to find marginal product.
- If MP becomes negative, it means adding more input decreases total output—this is called negative returns.
- Know the difference: MP = extra output, AP = per unit output, TP = sum total.
- Draw simple tables for calculations in exams; show formula and steps.
- Practice with real data for fast calculator use in MCQs and numericals.
- Apply the concept to both labor and other resources, like capital or land.
Connect your understanding to related ideas in the Concept of Costs and Producers Equilibrium for full preparation.
At Vedantu, we simplify topics like marginal product formula for easy learning and exam success. This core economics formula helps you understand productivity, optimize resource use, and perform better in school, board, and competitive exams. Practise calculations, review the differences with average and total product, and always relate your learning to real business situations for better results.
FAQs on Marginal Product Formula Explained for Commerce Students
1. What is the formula for marginal product?
The marginal product formula calculates the additional output gained from adding one more unit of input. It's expressed as: MP = TPn - TPn-1, where TPn is the total product at the current input level and TPn-1 is the total product at the previous input level.
2. How do I calculate the marginal product in economics?
Calculating marginal product involves comparing total product (TP) at different input levels. To find the marginal product at a specific level, subtract the previous period's total product from the current total product. For example, if TP increases from 10 to 15 when input increases by 1 unit, then the marginal product is 15-10=5. This shows the extra output gained from the extra unit of input.
3. What is the difference between marginal product, average product, and total product?
These three concepts describe different aspects of production: Total Product (TP) is the total output produced; Average Product (AP) is the TP divided by the number of input units; and Marginal Product (MP) is the additional output from one extra unit of input. Understanding their differences is crucial for analyzing production efficiency and returns to scale.
4. Can you give a marginal product example?
Suppose a bakery's total output (TP) increases from 100 loaves to 115 loaves when adding one more worker. The marginal product of labor is 15 loaves. This indicates that the additional worker contributes 15 extra loaves. This is a basic example of how marginal product helps assess the productivity of additional inputs.
5. What is the marginal product of labor?
The marginal product of labor (MPL) specifically measures the change in total output resulting from employing one additional unit of labor. It's a key concept in production economics and helps determine optimal labor levels.
6. How is marginal product used in cost analysis?
Marginal product is vital in cost analysis because it helps determine the optimal input level for maximizing profits. By considering the relationship between marginal product and marginal cost, businesses can identify the point where additional input adds more to costs than to revenue.
7. What is the formula for marginal product Class 12?
The formula for marginal product remains the same regardless of class level. It's MP = TPn - TPn-1. Understanding this formula is essential for Class 12 economics exams.
8. What is marginal product with example?
Marginal product measures the extra output from adding one more unit of input. For example, if adding one more machine increases production from 100 to 120 units, the marginal product of that machine is 20 units. This signifies increased productivity.
9. What is the formula for marginal product and total product?
There isn't a single formula combining marginal product (MP) and total product (TP). However, MP is *derived* from TP using the formula: MP = TPn - TPn-1. You calculate TP by summing individual outputs.
10. How does marginal product relate to diminishing returns?
The law of diminishing returns states that as you add more and more units of input (while keeping other inputs constant), the marginal product of each additional unit will eventually decrease. This means that the increase in output from each extra unit of input becomes smaller and smaller.
11. What is the marginal product formula example?
Let's say that when 2 workers produce 10 units, and 3 workers produce 14 units. The marginal product of the third worker is 4 units (14-10). This is a simple yet effective marginal product formula example.
12. Marginal product formula class 11?
The marginal product formula for Class 11 economics is the same as for other levels: MP = TPn - TPn-1. Mastering this formula is vital for success in Class 11 examinations.

















