Difference between revisions of "Diminishing marginal returns"

Latest revision as of 23:38, March 9, 2009

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-The principle of '''diminishing marginal returns''' states that [[production system]]s have a point beyond which each additional unit of [[input]] will yield less and less additional [[output]]. All other factors of production are held fixed for this analysis.
+#REDIRECT [[Diminishing returns]]
-Explained a different way, diminishing marginal returns consist of the inevitable point beyond which additions of a variable factor ([[input]]) will yield diminishing marginal returns ([[output]]) per unit of the variable factor.  All other factors of production are held fixed for this analysis.
-Note that at first there may be increasing marginal returns, and this principle about diminishing marginal returns expresses what will be inevitably reached as inputs are increased.
-Example:  there are diminishing marginal returns in painting a house.  The initial workers yield great [[output]], but adding more and more workers to the job will inevitably lead to less and less additional [[output]] as the workers begin to distract each other and lack opportunities for improving the result,
-[[Category:Economics]]