The term marginal output describes the value in production of every additional employee that a firm hires. Let’s assume that the marginal output per new worker is as follows:
Number of Chairs Produced Per Day
Given these facts, the marginal output for the various employees is as follows:
- The marginal output of the first worker is 10 chairs.
The marginal output of the second worker is 9 chairs.
The marginal output of the third worker is 8 chairs.
The marginal output of the fourth worker is 7 chairs.
When the term marginal output is used without mentioning a specific employee or a ranking, then the term always refers to the last employee hired. In this example, it refers to the fourth worker.