AP = (TP / Units of Input)

• Rationale:
  If a factory hires more workers to work with a constant amount of capital (ex. equipment), marginal output start to rise as the factory specialize and become more efficient. However, after a certain point, output will increase at a decreasing rate. This is when diminishing returns sets in, because additional workers do not add to as much efficiency per worker. Then at one point, total efficiency is lost because of overcrowding, and marginal product will decrease.
• This is why the world CANNOT be fed from a single flower pot.
• The law of diminishing returns assumes that all units of labor are of equal quality, each successive worker is presumed to have the same innate ability, motor coordination, education, training, and work experience.

• Graphical Portrayal:

• When MP lies above AP, AP rises.
• When MP lies below AP, AP falls.
• MP intersects AP at its maximum value
• When MP crosses the X-axis, it signifies a move from diminishing marginal returns to negative marginal returns.