MP is the addition made to the total product when one more unit of the inputs employed.
MP =\(\Delta \)TP / \(\Delta \)N or MP = TP(n) - TP(n-1)

(i) Production function refers to the relationship among units of the factors of production (inputs) and the resultant quantity of a good produced (output).
(ii) Q = f(N, L, K, T);
Q = Quantity of output, N = Land, L = Labour, K = Capital, T = Technology

(i) Land and labour are the primary factors.
(ii) Capital and organisation are the secondary factors.

Initiation: He considers the situation and availability of resources and plans the process of production.
Innovation: He introduces new methods in the production process.
Co-ordination: He uses a particular combination of the factors of production.
Control, direction & supervision: He directs the factors to get better results and supervises for the efficient functioning of all factors.
Risk taking, uncertainty bearing: Risk is insured, uncertainties cannot be insured.

Nature of the commodity:
(i) Durable goods can be stored for long till price increases so elasticity of supply is high.
(ii) Perishables have to be sold immediately, so elasticity of supply is low.
Cost of production:
When there is constant or increasing returns, supply increases so elasticity of supply is greater.
Technology:
In large-scale production with huge capital investment supply cannot be adjusted easily, so elasticity of supply is less.
Time factor:
During very short period, supply cannot be adjusted, so elasticity of supply is very low.

Land is a primary factor of production.
1. It is a passive factor.
2. It is a free gift of nature.
3. It has no cost of production.
4. Its supply is inelastic.
5. It is permanent. 
6. It is immovable.
7. It is heterogeneous.
8. The fertility differs.
9. It has alternative uses.
10. It faces law of diminishing returns.

Introduction:
In the long run there is no difference between fixed factor and variable factor.
Meaning:
The laws of returns to scale explain the relationship between output and the scale of inputs in the long run when all the inputs are increased in the same proportion.
Assumptions:
1. All the factors of production are variable except organisation.
2. There is no change in technology.
3. There is perfect competition.
4. Output is measured in physical quantities.
Increasing returns to scale:
If all inputs are increased by 1 %, output increases by more than 1 %.
Constant returns to scale:
lf all inputs are increased by 1%, output increases exactly by 1 %.
Diminishing returns to scale:
If all inputs are increased by 1 %, output increases by less than 1 %.
Explanation:
a) The movement from point a to b shows increasing returns to scale. When 2 units labour and capital are used the output has increased from IQ₁ to IQ₃.
b) The movement from b to c shows constant returns. When 4 units of labour and capital are used (i.e. double) the output also has doubled from IQ₃ to IQ₆.
c) The movement from c to d shows decreasing returns. The doubling of the factors from 4 units to 8 units has produced less increase in output i.e. from IQ₆ to only IQ₈
Stages input Output returns to Scale a to b 100% ↑ 200% ↑ increasing b to c 100% ↑ 100% ↑ Constant c to d 100% ↑ 33.33% ↑ decreasing

Introduction:
The law states that if all other factors are fixed and one input is varied in the short run, the total output will increase at an increasing rate at first, then be constant and finally increase at a declining rate.
Definition:
"As equal increments of one input are added, the inputs of other productive services being held constant, beyond a certain point, the resulting increments of product will decrease (i.e) the MP will diminish". - G. Stigler
Assumptions:
1. Only one factor is variable.
2. All units of the variable factor are homogeneous.
3. The product is measured in physical units.
4. No change in technology.
5. No change in price of the product.

Units of variable factor	Total Product (TPL)	Marginal Product (MPL)	Average Product (APL)	Stages
1 2 3	2 6 12	2 4 6	2 3 4	I
4 5	16 18	4 2	4 3.6	II
6 7	18 16	0 -2	3 2.28	III

x-axis represents labourers. y-axis represents TP_L, MP_L, AP_L

Stages	Total Product (TP)	Marginal Product (MP)	Average Product (AP)
Stage I	It increases at an increasing rate. Then it increases at a decreasing rate. This is the point of inflection.	It increases, reaches maximum and starts to decrease.	It increases, reaches maximum.
Stage II	It continues to increase at a diminishing rate and reaches maximum	It continues to diminish and becomes zero.	It is equal to MP then begins to diminish.
Stage III	It diminishes.	It becomes negative	It diminishes but always is positive.

Conclusion:
The law of variable proportion helps the producer to decide on the amount of factors to be employed.