20:
361:, the marginal product initially increases when more of an input (say labor) is employed, keeping the other input (say capital) constant. Here, labor is the variable input and capital is the fixed input (in a hypothetical two-inputs model). As more and more of variable input (labor) is employed, marginal product starts to fall. Finally, after a certain point, the marginal product becomes negative, implying that the additional unit of labor has
411:
The relationship can be explained in three phases- (1) Initially, as the quantity of variable input is increased, TPP rises at an increasing rate. In this phase, MPP also rises. (2) As more and more quantities of the variable inputs are employed, TPP increases at a diminishing rate. In this phase,
47:) 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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403:, this proposition about the marginal product of capital cannot generally be sustained in multi-commodity models in which capital and consumption goods are distinguished.
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wage. In aggregate models of perfect competition, in which a single good is produced and that good is used both in consumption and as a capital good, the
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If the output and the input are infinitely divisible, so the marginal "units" are infinitesimal, the marginal product is the mathematical
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MPP starts to fall. (3) When the TPP reaches its maximum, MPP is zero. Beyond this point, TPP starts to fall and MPP becomes negative.
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curve, which is the production function plotted against labor usage for a fixed level of usage of the capital input.
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is the change in the quantity of output produced (resulting from the change in the input). Note that the quantity
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are inputs to production (say, capital and labor, respectively). Then the marginal product of capital (
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Classical
Economics: An Austrian Perspective on the History of Economic Thought, Volume II
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is the change in the firm's use of the input (conventionally a one-unit change) and
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the output, rather than increasing it. The reason behind this is the diminishing
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Change in output resulting from employing one more unit of a particular input
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Relationship of marginal product (MPP) with the total product (TPP)
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Mukherjee, Sampat; Mukherjee, Mallinath; Ghose, Amitava (2003).
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Average physical product (APP), marginal physical product (MPP)
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The marginal product of a given input can be expressed as:
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The Making of the
Classical Theory of Economic Growth
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347:{\displaystyle MPL={\frac {\partial F}{\partial L}}}
295:{\displaystyle MPK={\frac {\partial F}{\partial K}}}
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with respect to that input. Suppose a firm's output
372:The marginal product of labor is the slope of the
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577:. Auburn, Alabama: Ludwig von Mises Institute.
168:of the "product" is typically defined ignoring
92:{\displaystyle MP={\frac {\Delta Y}{\Delta X}}}
433:Marginal revenue productivity theory of wages
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531:Theory of Production: A Long-Period Analysis
529:Kurz, Heinz D. and Neri Salvadori (1995)
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509:. New Delhi: Prentice-Hall of India.
187:is given by the production function:
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553:. vdf, Hochsch.-Verlag an der ETH.
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246:) and marginal product of labor (
379:In the neoclassical theory of
367:marginal productivity of labor
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41:marginal physical productivity
1:
533:. Cambridge University Press.
401:Cambridge capital controversy
568:Rothbard, Murray N. (1995).
359:diminishing marginal returns
428:Marginal product of capital
393:marginal product of capital
170:external costs and benefits
625:
550:Volkswirtschaft verstehen
423:Marginal product of labor
385:marginal product of labor
478:Brewer, Anthony (2010).
224:{\displaystyle Y=F(K,L)}
141:{\displaystyle \Delta Y}
118:{\displaystyle \Delta X}
547:Beck, Bernhard (2008).
399:. As was shown in the
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33:neoclassical economics
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602:Production economics
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181:production function
453:Cost of production
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31:and in particular
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607:Marginal concepts
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443:Production theory
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161:{\displaystyle Y}
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357:In the "law" of
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37:marginal product
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458:Shadow price
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395:equals its
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596:Categories
465:References
177:derivative
363:decreased
336:∂
328:∂
284:∂
276:∂
133:Δ
110:Δ
81:Δ
73:Δ
29:economics
416:See also
179:of the
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383:, the
234:where
102:where
35:, the
575:(PDF)
579:ISBN
555:ISBN
511:ISBN
486:ISBN
389:real
238:and
248:MPL
244:MPK
39:or
27:In
598::
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339:L
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322:=
319:L
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270:=
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261:M
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236:K
219:)
216:L
213:,
210:K
207:(
204:F
201:=
198:Y
185:Y
156:Y
136:Y
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84:X
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67:=
64:P
61:M
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