Asked by Jhollo Redondo on May 14, 2024
Verified
What is the law of diminishing returns? Include its two assumptions.
Law of Diminishing Returns
A principle stating that as one factor of production is increased while others are held constant, there comes a point at which the marginal gain in output begins to decrease.
- Learn about the law of diminishing returns and its assumptions.
Verified Answer
TT
Tanya TavarezMay 21, 2024
Final Answer :
The law of diminishing returns is the principle that as successive increments of a variable resource are added to a fixed resource, the marginal product of the variable resource will eventually decrease. This law assumes that technology is fixed and that all units of labor are of equal quality.
Learning Objectives
- Learn about the law of diminishing returns and its assumptions.