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In economics, diminishing returns are the decrease in marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors of production equal (ceteris paribus).
28. Feb. 2024 · The law of diminishing marginal returns states that adding an additional factor of production results in smaller increases in output. After some optimal level of capacity utilization, the...
The law of diminishing returns says that, if you keep increasing one factor in the production of goods (such as your workforce) while keeping all other factors the same, you’ll reach a point beyond which additional increases will result in a progressive decline in output.
21. Juli 2021 · Definition: Law of diminishing marginal returns. At a certain point, employing an additional factor of production causes a relatively smaller increase in output. Diminishing returns occur in the short run when one factor is fixed (e.g. capital)
What is the law of diminishing returns? 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.
Actually, the law of diminishing returns applies to the marginal productivity. So your solution of adding additional workers doesn't work. The law says that with increasing inputs (capital / labor) the returns will keep becoming less and less, and yes eventually even negative.
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1. Jan. 2024 · Diminishing Returns. Reference work entry. First Online: 01 January 2024. pp 1804–1808. Cite this reference work entry. Carme Riera-Prunera. 6 Accesses. Download reference work entry PDF. Synonyms. Decreasing returns to scale; Diminishing marginal returns; Flowerpot law; Law of diminishing (marginal) returns. Definition.
