Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 13 - Part V - The Costs of Production - Questions for Review - Page 275: 3


Marginal product is the increase in output that arises from an additional unit of output, the goal of calculating marginal output is to try and figure out how the last unit of input will effect the total output of all other inputs remain unchanged. If it is diminishing marginal product, them it means that the marginal product of an input declines as more output increases - when you hire more inout (workforce) you may not always increase profits.

Work Step by Step

An example a marginal product is when a bakery owner needs to increase the production of French bread, so he must consider how an additional unit of input (labour) will effect his total output of French bread. An example of diminishing marginal product would be if the French bread owner decided to hire more staff in his bakery, but he ended up creating less output (bread) because as number of workers increases there will be shortage of workspace and supplies.
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