User:Sterling.huo/Marginal product

Definition In economics and in particular neoclassical economics, the marginal product or marginal physical productivity of an input (factor of production) is the change in output resulting from employing one more unit of a particular input (for instance, the change in output when a firm's labor is increased from five to six units), assuming that the quantities of other inputs are kept constant.

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How is marginal product calculated and examples :

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The marginal product of capital is the additional output that results from adding one unit of capital—typically cash. This metric often applies to start-ups, who rely on private investment to get their business off the ground.

The marginal product of labor is the additional output resulting from hiring another worker. This tends to apply to established businesses, like an automobile factory that adds a new worker to the production line.



The marginal product of land is the additional output gained from adding another unit of land. This might apply to a farmer who purchases a field adjacent to her existing property, or a factory owner who increases the square footage of her facility.

The marginal product of raw materials is the additional output gained from increasing a unit of material supply. Think of a rechargeable battery manufacturer who purchases a cache of lithium or cobalt (essential materials in manufacturing the leading model of battery.

What Is the Difference Between Marginal Product and Marginal Cost?



While marginal product concerns change in output, marginal cost is a representation of the costs incurred when additional units of a product are produced.