MARGINAL PRODUCTIVITY Meaning and
Definition
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Marginal productivity refers to the additional output or outcome that is generated by increasing the use of one specific input while holding all other inputs constant. It is a concept derived from the field of economics and is often used in the analysis of production and resource allocation.
In simple terms, marginal productivity measures the change in output or result that occurs when a single input is incrementally increased, assuming that all other inputs remain unchanged. It helps in understanding the efficiency and effectiveness of using additional units of a particular input in production.
Mathematically, marginal productivity is calculated as the ratio of change in output to the change in input. By comparing the additional output generated with the cost of employing an additional input, decision-makers can make informed choices regarding resource allocation and determine the optimal level of input use.
Understanding marginal productivity is crucial for businesses and organizations as it allows them to assess the impact of incremental changes in inputs on overall production efficiency. By analyzing the marginal productivity of various inputs, managers can make informed decisions about resource allocation, cost control, and production optimization, ultimately leading to improved profitability and competitiveness.
Etymology of MARGINAL PRODUCTIVITY
The word "marginal" comes from the Late Latin word "marginalis", which means "bordering" or "on the edge". It is derived from the Latin word "margo", meaning "margin" or "edge". In this context, "marginal" refers to the small addition or change in a particular variable.
On the other hand, "productivity" comes from the Latin word "productivus", which is derived from "productum", meaning "production" or "achievement". It combines the Latin words "producere" (to produce) and "productum" (product). "Productivity" generally refers to the measure of output or production per unit of input.
Therefore, the term "marginal productivity" combines "marginal", signifying a small change or addition, and "productivity", relating to the measure of output per unit of input.
