Marginal product of capital
Encyclopedia
Marginal product of capital (MPK) is the additional output
resulting from the use of an additional unit of capital
(ceteris paribus
assuming all other factors are fixed). It equals 1 divided by the Incremental capital-output ratio
. It is the partial derivative of the production function with respect to capital.
Output (economics)
Output in economics is the "quantity of goods or services produced in a given time period, by a firm, industry, or country," whether consumed or used for further production.The concept of national output is absolutely essential in the field of macroeconomics...
resulting from the use of an additional unit of capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
(ceteris paribus
Ceteris paribus
or is a Latin phrase, literally translated as "with other things the same," or "all other things being equal or held constant." It is an example of an ablative absolute and is commonly rendered in English as "all other things being equal." A prediction, or a statement about causal or logical...
assuming all other factors are fixed). It equals 1 divided by the Incremental capital-output ratio
Incremental capital-output ratio
The Incremental Capital-Output Ratio , is the ratio of investment to growth which is equal to 1 divided by the marginal product of capital. The higher the ICOR, the lower the productivity of capital. The ICOR can be thought of as a measure of the inefficiency with which capital is used. In most...
. It is the partial derivative of the production function with respect to capital.