How is marginal product calculated?

Marginal product refers to the additional output that is produced when one more unit of a specific input, typically labor, is added, while all other inputs are held constant. The calculation for marginal product involves determining the change in total product that results from a change in total labor.

To express this mathematically, it is represented as the change in total product divided by the change in total labor, which captures the incremental output gained per additional unit of labor. This is critical in production theory as it helps firms understand how efficiently they are utilizing their labor resources. By analyzing the marginal product, businesses can make informed decisions about hiring and optimizing their workforce to enhance production levels.

The other options do not accurately reflect the concept of marginal product. Total product divided by total labor relates to average product, while total revenue divided by total cost refers to profitability measures, neither of which pertains directly to the calculation of marginal product. Change in output divided by change in input does provide an idea of productivity changes but is not typically the precise phrasing used in economics for marginal product, which is specifically focused on the output change in relation to labor inputs.