diminishing returns, also called law of diminishing returns or principle of diminishing marginal productivity, economic law stating that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output.
What is diminishing returns to an input?
The law of diminishing returns states that as one input variable is increased, there is a point at which the marginal increase in output begins to decrease, holding all other inputs constant. At the point where the law sets in, the effectiveness of each additional unit of input decreases.
What do economists mean by diminishing returns to an input quizlet?
The term diminishing returns refers to. a decrease in the extra output due to the use of an additional unit of a variable input, when more and more of the variable input is used and all other things are held constant.
What causes a diminishing return?
Neoclassical economists postulate that each “unit” of labor is exactly the same, and diminishing returns are caused by a disruption of the entire production process as extra units of labor are added to a set amount of capital.
What is an example of diminishing returns?
Adding even more cooks magnifies these problems, causing the total output to go up at an even smaller rate. This is an example of the Law of Diminishing Returns, also called the Law of Diminishing Marginal Returns: with increased investment (cooks), returns increase, but at a decreasing rate.
What are diminishing returns simple definition?
The law of diminishing returns is an economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain at a constant.
What causes diminishing returns quizlet?
Law of diminishing returns: In the short run, when variable factors of production are added to a stock of fixed factors of production total/marginal product will initially rise, but then will fall.
Which of the following best defines the law of diminishing returns?
Which of the following best describes the law of diminishing marginal returns? When more and more of a variable resource is added to a given amount of a fixed resource, the resulting change in output will eventually diminish and could become negative.
What is another name for the law of diminishing returns?
Compare Synonyms. going belly up. losings. losses.
Which statement best illustrates the law of diminishing returns?
The correct answer is (b) As study hours increase, the amount of learning will increase at a diminishing rate.
Can you explain the law of diminishing returns with a real life example?
In the classic example of the law, a farmer who owns a given acreage of land will find that a certain number of labourers will yield the maximum output per worker.
What are the three stages of diminishing returns?
Therefore we can say that there are three stages of the law of diminishing returns: Increase of marginal returns. Maximum marginal returns. Diminishing marginal returns.
What is meant by law of diminishing returns quizlet?
Law of Diminishing Returns. the law states that continuous increases of one input factor while holding the other input factors fixed will lead to a decrease in the per unit output of the variable input factor.
What is the law of diminishing marginal returns quizlet?
The law of diminishing marginal returns states that as a firm uses more of a variable factor of production with a given quantity of the fixed factor of production, the marginal product of the variable factor eventually diminishes.
What does diminishing marginal product imply quizlet?
explanation: The law of diminishing marginal returns states that if every other input is held constant, increases in the variable input will eventually result in smaller increases in output. Thus, marginal product eventually decreases.
Which of the following best expresses the law of diminishing returns?
Which of the following best expresses the law of diminishing returns? As successive amounts of one resource (labor) are added to fixed amounts of other resources (capital), beyond some point the resulting extra or marginal output will decline.
Which statement best illustrates the law of diminishing returns from studying?
The correct answer is (b) As study hours increase, the amount of learning will increase at a diminishing rate.
Why did economists use the law of diminishing returns?
Early economists, neglecting the possibility of scientific and technical progress that would improve the means of production, used the law of diminishing returns to predict that as population expanded in the world, output per head would fall , to the point where the level of misery would keep the population from increasing further.
What is diminishing returns?
diminishing returns, also called law of diminishing returnsor principle of diminishing marginal productivity, economic law stating that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output.
What is the principle of diminishing marginal productivity?
Diminishing returns, also called law of diminishing returns or principle of diminishing marginal productivity, economic law stating that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached ...
Why would the combination of land and labour be less efficient?
If he should hire more workers, the combination of land and labour would be less efficient because the proportional increase in the overall output would be less than the expansion of the labour force. The output per worker would therefore fall.