Suppose labor (L) is the variable input in some production process and machinery is a fixed input. Q represents output, MP is marginal product of labor or the added output due to the addition of another worker, and AP is average product of labor or Q divided by L.

   As labor increase, output rises, but in the short run it increases at a decreasing rate after the first few workers. As we can see, diminishing marginal product sets in after the 3rd worker. This is the law of diminishing returns and is strictly a short run phenomenon.

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Labor Q MP AP
0 0 0 0.0
1 4 4 4.0
2 13 9 6.5
3 23 10 7.7
4 32 9 8.0
5 40 8 8.0
6 47 7 7.8
7 53 6 7.6
8 58 5 7.3
9 62 4 6.9
10 65 3 6.5