Ano ba ang "law of diminishing returns"?

Question

Ano ba ang "law of diminishing returns"?

Answer 1

In economics, diminishing returns is also called diminishing marginal returns or the law of diminishing returns. According to this relationship, in a production system with fixed and variable inputs (say factory size and labor), beyond some point, each additional unit of variable input yields less and less additional output. Conversely, producing one more unit of output costs more and more in variable inputs. This concept is also known as the law of increasing relative cost, or law of increasing opportunity cost. Although ostensibly a purely economic concept, diminishing marginal returns also implies a technological relationship. Diminishing marginal returns states that a firm's short run marginal cost curve will eventually increase.

Diminishing returns says that the marginal physical product of an input will fall as the total amount of the input rises (holding all other inputs constant). A standard qualification is that diminishing returns applies after a possible initial increase in marginal returns. So, on its own terms, it is less than a universal law.

There is evidence for possible increasing marginal returns in certain circumstances. A single fax machine is useless and returns nothing, but if two exist, they can exchange messages, increasing the network by 2 exchanges. A third allows each machine to send messages to two points, increasing the network by 4 exchanges . A fourth allows three points of exchange, with a marginal return of 8 exchanges, and so on. This law remains to be proven mathematically.

Answer 2

If you're asking what it is, "law of diminishing returns" suggests that at some point of production each additional unit produced costs more (or produces less for the same cost.)