Marginal product refers to the additional output generated when one more unit of input (such as labor or capital) is employed while keeping other inputs constant.
Related terms
Diminishing Marginal Returns: Diminishing marginal returns occur when adding more units of input leads to smaller increases in output. This happens when there are limited resources or inefficient use of inputs.
Law of Diminishing Marginal Returns: The law states that as more units of a variable input are added to fixed inputs, eventually the marginal product will decrease.
Production Function: A production function shows how different combinations of inputs (such as labor and capital) can produce different amounts of output.