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Economics 101: Marginal Product | SterlingTerrell.net

Economics 101: Marginal Product


What is marginal product?

Marginal Product is the change in output that results from one more unit of input.

For example:

Say you manufacture cars, and can produce 100 cars per day.

Marginal product takes one of the inputs to producing cars and asks a question like:

If we hired one more plant employee, how many more cars could we produce each day?

Formally:

Marginal Product =  Change in Ouput / Change in Input