Step 5: Compute the marginal product-
Calculate the marginal product by dividing the change in the total output by the change in the inputs.
Marginal products are mostly measured in physical units. some of the examples of them are:
Retail industry: Consider a retail company making a profit of Rs. 40,000 daily kenya phone number list with the help of 10 staff members. A retail company is now planning to hire two extra staff members to improve their customer service and sales during their heavy season. By adding two staff members, the company notes an increase in sales of Rs. 48,000. The marginal product here will be:
Initial output (before hiring new staff): Rs. 40,000
New output: Rs. 48,000
Change in output: new output – old output = 48,000 – 40,000 = Rs. 8,000
Change in input: 2 staff members
The marginal product can be calculated by dividing the change in output by the change in input.
Marginal product = change in output/change in input = 8000/2 = Rs. 4,000 per staff member.
Agriculture industry: Imagine a farmer has 1 acre of land and needs 10 units of fertilizer to produce around 200 kg of wheat. When a farmer adds one more unit of fertilizer, the wheat production is increased to 220 kg. So, the marginal product here will be:
Initial yield: 200 kg
New yield: 220 kg
Change in yield (output): 220-200 = 20 kg
Change in fertilizer (input): 1 unit
Marginal product = change in output/change in input = 20/1 = 20 kg per fertilizer’s unit.