Marginal product

A marginal product or marginal product is in production theory, the increase of the yield (or the benefits, see also marginal utility ), which is achieved by the use of each additional unit of a factor of production. According to the law of diminishing returns the marginal product of a factor of production decreases under otherwise identical conditions ( ceteris paribus ) is continuous. In the Cobb -Douglas production function, the marginal product of a variable factor is always positive, but continuously falling.

Example

Someone managed a field, with different factors of production such as land, labor, seeds and fertilizers are used. He now increase by a factor of fertilizer, first increases the yield (amount of crop per unit area ) and thus the marginal product of the fertilizer. He now uses more fertilizer one, he finds that plant growth is not arbitrarily be increased: the marginal product ( = the additional yield ) is always lower. For eutrophication the yield of the crop per unit area decreases even again, which then leads to a negative marginal product of fertilizer ( extreme over-fertilization can take up to total loss of cultivated fruit lead ).

So Negative marginal returns occur because one factor gets into a growing disproportion to the other factors.