Enter the change in production and the change in capital units into the Calculator. The calculator will evaluate the Marginal Product of Capital. 

Marginal Product of Capital Formula

MPOC = CP / CC

Variables:

  • MPOC is the Marginal Product of Capital (production/unit)
  • CP is the change in production
  • CC is the change in capital units

To calculate Marginal Product of Capital, divide the total change in production by the change in capital units.

How to Calculate Marginal Product of Capital?

The following steps outline how to calculate the Marginal Product of Capital.


  1. First, determine the change in production. 
  2. Next, determine the change in capital units. 
  3. Next, gather the formula from above = MPOC = CP / CC.
  4. Finally, calculate the Marginal Product of Capital.
  5. After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem : 

Use the following variables as an example problem to test your knowledge.

change in production = 300

change in capital units = 20

FAQs

What is Marginal Product of Capital?

Marginal Product of Capital (MPC) refers to the additional output produced as a result of adding one more unit of capital, holding all other inputs constant. It is a measure of the productivity of capital in the production process.

Why is the Marginal Product of Capital important?

Understanding the Marginal Product of Capital is crucial for businesses as it helps in making informed decisions regarding investment in capital. It indicates how efficiently capital is being used and helps in optimizing the allocation of resources to maximize production and profits.

Can Marginal Product of Capital be negative?

Yes, the Marginal Product of Capital can be negative. This occurs when the addition of capital leads to a decrease in total production. This can happen due to factors such as overcrowding of machinery or inefficient use of capital resources.

How does Marginal Product of Capital relate to Marginal Cost?

The Marginal Product of Capital is inversely related to the Marginal Cost of production. As the Marginal Product of Capital increases, it means that production is becoming more efficient with each additional unit of capital, which can lead to a decrease in the Marginal Cost of producing an additional unit of output.