What does marginal product refer to?

Marginal product refers to the additional output generated by adding one more unit of input while keeping other inputs constant. It is a key concept in production theory that helps assess how effectively an input contributes to the overall output of a production process. When evaluating the impact of increasing input, such as labor or raw materials, the marginal product provides insight into the productivity of that additional input. By measuring the incremental output, businesses can make informed decisions about resource allocation and optimal input levels in their production operations.

In contrast, total output generated represents all the output produced, which does not capture the additional contribution of incremental input. The output achieved per unit of input addresses productivity but does not focus specifically on the impact of adding one more unit. Total revenue from increased production pertains to the financial aspect of production and does not directly relate to the concept of marginal product.