rajatuottavuuteen

Rajatuottavuuteen, often translated as marginal productivity, is a fundamental concept in economics, particularly within the theory of production. It refers to the additional output produced by a firm or individual when one more unit of a variable input, such as labor or capital, is employed, assuming all other inputs remain constant. This concept is crucial for understanding how firms make decisions about resource allocation.

The law of diminishing marginal productivity states that as more units of a variable input are added to a fixed amount of other inputs, the marginal productivity of the variable input will eventually decrease. For example, if a farmer has a fixed amount of land and adds more and more farmhands, eventually, each additional farmhand will contribute less to the total harvest than the previous one due to overcrowding or inefficient use of resources.

Firms use the concept of marginal productivity to determine the optimal level of input employment. They will continue to hire additional units of a variable input as long as the value of the marginal product (the marginal product multiplied by the price of the output) is greater than or equal to the cost of employing that additional unit of input (e.g., the wage of a worker). Understanding rajatuottavuuteen helps explain wage determination, resource allocation, and the overall efficiency of production processes.