📈The marginal product is the additional output generated by adding one more unit of input.
💼Marginal product analysis helps businesses determine the impact of hiring an additional worker on production.
⏱️Marginal product is measured in physical units, such as the number of cars or tons of steel.
🔄As more units of input are added, the rate of increase in output eventually decreases.
⛔The law of diminishing returns states that adding more input eventually leads to a reduction in total output.
What is the marginal product?
—The marginal product is the extra output generated by adding one more unit of input.
How does marginal product analysis help businesses?
—Marginal product analysis helps businesses determine the impact of hiring an additional worker on production.
How is marginal product measured?
—Marginal product is measured in physical units, such as the number of cars or tons of steel.
What is the law of diminishing returns?
—The law of diminishing returns states that adding more input eventually leads to a reduction in total output.
What are the key assumptions of marginal product measurement?
—The key assumptions include holding all other inputs fixed and measuring in physical units.
00:00Businesses analyze the impact of hiring an additional worker on production.
00:13The marginal product is the additional output generated by adding one more unit of input.
01:35The law of diminishing returns states that adding more input eventually leads to a reduction in total output.
