The marginal product - It is important to note that the...

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The marginal product Let us assume one worker and a small quantity of raw materials together form a variable input unit. With every increase in the variable unit, output will increase simultaneously. This increase will appear in the total output. Such an increase in the total output is not exactly proportional. Every additional variable unit may make a different contribution to the firm’s total output. Such additions, of individual variable units, are called the marginal product
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Unformatted text preview: . It is important to note that the marginal product is essentially an outcome of the functioning of variable input units. This is because fixed inputs are not themselves capable of producing any output. In this sense fixed inputs are ’ supplementary ’ while variable units are ’ prime ’ in their contributions. This can be illustrated with the help of a numerical example. The entire process of productive activity in the example is subject to the law of variable returns....
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