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Law of diminishing returns (view source)
Revision as of 03:26, April 23, 2007
, 03:26, April 23, 2007New page: The law of diminishing returns states that a point will be reached when further additions of a variable input will yield diminishing marginal returns per unit of that variable. This is on...
The law of diminishing returns states that a point will be reached when further additions of a variable input will yield diminishing marginal returns per unit of that variable. This is one of the most fundamental principles in economics.
Note that marginal returns may increase at first based on increases in an input, and the law of diminishing returns merely states that eventually a point of diminishing returns will be reached for each input.
An easy-to-remember example of this law is a person's decrease in satisfaction from eating more and more french fries.
Note that marginal returns may increase at first based on increases in an input, and the law of diminishing returns merely states that eventually a point of diminishing returns will be reached for each input.
An easy-to-remember example of this law is a person's decrease in satisfaction from eating more and more french fries.