Marginal product is referred to as the additional product that is produced as a result of adding an additional unit of input. In other words, a change in production output due to the change in production input is known as marginal product.
The change obtained in the output is done by changing only the input, whereas all other factors of production such as land, capital remained unchanged.
It plays an important role in the analysis of short-run production. Its role is critical in understanding the law of supply. Marginal product is the most important short-run production term.
The mathematical representation of marginal product formula is
Marginal Product = Change in Output/ Change in Input
Or Marginal Product = ∆TP/∆L
Or Marginal Product = (Qn – Qn-1) / (Ln – Ln-1)
Qn = Total product at time n
Qn-1 = Total production at time n-1
Ln = Total units at time n
Ln-1 = Total units at time n-1
Marginal product helps companies in determining the increase in production resulting from the addition of a unit of labour. The objective is to employ that much of the workforce with which maximum productivity and revenue can be generated.
This was all about the Marginal product formula, which is a very important concept for determining the law of supply. For more such interesting concepts on Economics for Class 12, stay tuned to CoolGyan’S.