Share This Article:

Economic Definition of marginal productivity theory. Defined.

Offline Version: PDF

Term marginal productivity theory Definition: A theory used to analyze the profit-maximizing quantity of inputs (that is, the services of factor of productions) purchased by a firm in the production of its output. Marginal productivity theory indicates that the demand for a factor of production input is based on the marginal product of the factor and the price of the output produced by the factor.

 

« marginal product curve | marginal propensity for government purchases »

Permalink: http://glossary.econguru.com/economic-term/marginal+productivity+theory

Alphabetical Reference to Over 2,000 Economic Terms