Wednesday, April 4, 2018

Diminishing marginal return to short run production begins when?


The point at which the initial change occurs mathematically is the derivative in simple view of The Law of Diminishing Marginal Returns.

In practical economics what happens is that an additional factor of production causes a relatively smaller increase in output.

Diminishing returns occurs in the short run when one factor of production is fixed and the other(s) such as capital, labor, or technology is varying.

If the chosen variable factor of production is increased there the point where it will become less productive is the point where the tangent line touches the curve and there will be a decreasing marginal and then average product.

This law only applies in the short run as in the long run, all factors are variable.
Law of diminishing marginal return curve explained:






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