relationship between inputs and outputs, which expressed in the mathematical form. q = f(K,L,M,….) The function tells that output (q) is a function to capital input (K), labor (L), raw material (M) and others. In essence, a firm must know how to allocate resources K,L,M… to yield output, q.
Diminishing Marginal Product: Although adding inputs into the production is generally viewed can increase output. However, firms cannot continuously add inputs to its production process.
Suppose AP is 400 units when 25 labors are used with total output = 10000 units. If labor increases to 50 people, AP falls to 200 units. Since MP is falling with additional labor, AP is also falling. With 50 workers, MP may be zero if TP is maximum, but AP is still positive figure.