Can You Explain The Law Of Diminishing Returns?

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16 Answers

Ammar Bajwa Profile
Ammar Bajwa answered
The law of diminishing returns is simply common sense which most of us will understand even without reading about it in any economics course. It simply states that 'when you apply fixed and variable inputs beyond a point or limit, the out come will be less and less utility with each additional unit'.

Let us try to understand that there is a one acre land used for producing grapes and the fixed variables like land is fixed and the labour is the variable input which can change. If 3tons can be produced with 3 labours, then if you apply more labours on fixed land then the out come will ill less than satisfactory. As applying more labours will mean more costs and then to make those cost equal one will have to produce twice and that will have dire consequences on land and its fertility.

This is just an example in simple words but the concept which was traced back to the concerns of early economists such as Johann Heinrich , Turgot, Thomas Malthus and David Ricardo. Malthus and Ricardo, were worried that in order to increase output from agriculture, farmers would have to farm less fertile land or farm existing land with more intensive production methods. One can find more information in many books of economics as well on the internet.
Muhammad Gulazar Sajjad Profile
1- According to the law of diminishing returns:
A. The marginal product falls as more units of a variable factor are added to
a fixed factor.
B. Marginal utility falls as more units of a product are consumed.
C. The total product falls as more units of a variable factor are added to a
fixed factor.
D. The marginal product increases as more units of a variable factor are
added to a fixed factor.
Anonymous Profile
Anonymous answered
Option A would be correct answer for this question.
Tauseef Sheikh Profile
Tauseef Sheikh answered
The law of diminishing returns applies to the short run only when only one factor of production is variable and the other factors of production are fixed. Therefore option "A" is the correct.
Anonymous Profile
Anonymous answered
The marginal product of an input will eventually decline
Anonymous Profile
Anonymous answered
Both short and long run
Anonymous Profile
Anonymous answered
Option B is the right option which states that law refers to diminishing marginal returns.
Anonymous Profile
Anonymous answered
What will be the condition when The marginal product falls as more units of a variable factor are added to
a fixed factor?
Akshaya Kumar Jena Profile
The law of diminishing returns actually implies eventual diminishing marginal productivity to a variable factor. Since it receives less and less fixed factor per unit to work with, after the ideal factor proportionality is reached, the result will be diminishing returns.
Anonymous Profile
Anonymous answered
If there is no change in art of cultivation when the producer will increase his inputs on labour and capital
Rajesh Shri Profile
Rajesh Shri answered
The world of business has a number of complex calculations and operations involved in day-to-day functions. There are a number of factors that affect the operations within a business. All the operations are inter-connected and dependent on one another.

The removal or addition to one of the resources within each of the operations affects all the other processes involved. This inter-dependency, in a way, is responsible for the integrity within the business functions.

The Law of Diminishing Returns was written by a Frenchman Anne Robert Jacques Turgot and further added to by Thomas Malthus. The Law of Diminishing Returns states that when one of the many factors of production is fixed in supply for a pre-determined period of time, successive additions to the quantities of the other factors or to the factors themselves will initially lead to the desired increase in returns and profit up to a certain point.

But, beyond that point, the returns will diminish. This springs from the fact that the addition was not uniformly applied to all the factors and since their inter-dependency was affected, the returns were too. The Law of Diminishing Returns is applicable to any business and has always proved true. It advocates uniformity in application to all the processes and factors involved in a business.
Anonymous Profile
Anonymous answered
1- According to the law of diminishing returns:
A. The marginal product falls as more units of a variable factor are added to
a fixed factor.
B. Marginal utility falls as more units of a product are consumed.
C. The total product falls as more units of a variable factor are added to a
fixed factor.
D. The marginal product increases as more units of a variable factor are
added to a fixed factor.
Tauseef Sheikh Profile
Tauseef Sheikh answered
Option "D" is the correct answer. According to the law of diminishing returns the marginal product of an input will eventually decline

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