Answer to Question #240937 in Economics for CCW

Question

Econ. Chp. 4 Vocab:

make visual notes, acronyms, symbols to help remember definitions

17) marginal product -

18) law of diminishing returns -

Answer 1

The marginal product (MP) is an additional product, or additional expansion of production, obtained as a result of an increase in this factor by one unit with the remaining factors of production unchanged. The marginal product of a resource is expressed in physical units, as opposed to a commodity marginal product expressed in monetary terms (MRP). Therefore, in the economic literature, there is another, the literal name for this quantity - “physical volume of the marginal product”, or “marginal physical product.” “Marginal product” corresponds to the concept of “marginal utility” from the theory of consumption.

The law of diminishing returns, or diminishing returns, is an economic law stating that an increase in one of the factors of production (land, labor, capital) in excess of certain values provides an increase in income (result) by an ever-smaller amount, that is, the rate of increase in income (result) is less the rate of increase in the production factor.