2. The extra output that can be produced when the capital stock is increased by one unit, with labour held constant, is called the marginal product of capital (MPK). In a graphof the production funetion relating output to capital, the MPK can be measured as the slope of the production function. The MPK falls as the capital stock increases, reflecting the diminishing marginal productivity of capital. Similarly, the marginal product of labour (MPN) is the extra output that can be produced when labour increases by one unit, with capital held constant. The MPN—which can be measured as the slope of the production function relating output to labour—falls as employment rises, indicating that labour also has diminishing marginal productivity.