Diminishing returns: Difference between revisions
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According to the law of diminishing returns the contribution of the extra factors of production may rise at first, but after some point will always start to fall. So that ultimately the marginal returns from further extra factors of production will become smaller and smaller. | According to the law of diminishing returns the contribution of the extra factors of production may rise at first, but after some point will always start to fall. So that ultimately the marginal returns from further extra factors of production will become smaller and smaller. | ||
== See also == | == See also == | ||
* [[Marginal revenue]] | * [[Marginal revenue]] | ||
Revision as of 09:48, 22 June 2016
The Law of diminishing returns is a theory describing the contribution to total production which is expected to result from the addition of extra units of one factor of production.
According to the law of diminishing returns the contribution of the extra factors of production may rise at first, but after some point will always start to fall. So that ultimately the marginal returns from further extra factors of production will become smaller and smaller.
