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Law of Diminishing Marginal Returns

The law of diminishing marginal returns states that as more units of a variable input are added to a fixed amount of other inputs, eventually each additional unit will yield smaller and smaller increases in output. For example, as shown in the table, as more labor is added to produce a good, total product and average product increase at a decreasing rate, while marginal product first increases but eventually decreases.

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315 views

Law of Diminishing Marginal Returns

The law of diminishing marginal returns states that as more units of a variable input are added to a fixed amount of other inputs, eventually each additional unit will yield smaller and smaller increases in output. For example, as shown in the table, as more labor is added to produce a good, total product and average product increase at a decreasing rate, while marginal product first increases but eventually decreases.

Uploaded by

Nirmal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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LAW OF DIMINISHING MARGINAL RETURNS

LABOUR TOTAL PRODUCT AVERAGE PRODUCT MARGINAL PRODUCT


1 5 5 5
2 14 7 9
3 30 10 16
4 56 14 26
5 75 15 19
6 90 15 15
7 98 14 8
8 102 12.8 4
9 102 11.3 0
10 98 9.8 -2

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