The figure shows the marginal product of capital - the increment to GDP from an additional unit of capital – as a function of the capital stock.
Marginal utility, in economics, the additional satisfaction or benefit (utility) that a consumer derives from buying an additional unit of a commodity or service.
Moreover the cost per additional unit of output is such as to raise questions about the usefulness of the funding model.
It can, for example, measure the marginal productivity of a particular factor of production (i.e., the change in output from one additional unit of that factor).
Consumption is also thought to have diminishing marginal utility, i.e. a poorer person will value an additional unit of consumption more than his richer cousin.
For example, all of the students thought it was straightforward for a firm to set marginal cost (the cost of an additional unit of output) equal to marginal benefit (the revenue from an additional unit of output) in order to find the "optimal" level of output.
Any economist will tell you that the market price of a commodity is set by the marginal cost – or the cost added by producing one additional unit of a product.
The concept implies that the utility or benefit to a consumer of an additional unit of a product is inversely related to the number of units of that product he already owns.
Typically, it concentrates on macroeconomic relations, particularly the ratio of savings to total output and the aggregate capital output ratio (that is, the number of units of additional capital required to produce an additional unit of output).
Thus, suppose that 12 percent of total output is saved annually and that three units of capital are required to produce an additional unit of output: then the rate of growth in output is 12/3% = 4% per annum.
Oil demand in rich industrialized countries appears to have peaked, and the trend in developing economies is toward an ever-smaller increase in the amount of oil consumed for every additional unit of economic growth.
