Law of Diminishing Returns

The Law of Diminishing Marginal Returns states that as increasing quantities of a variable factor of production are combined with a fixed factor of production, a stage will eventually be reached when marginal returns will begin to decline. The short run is defined as a period during which at least one factor of production is fixed in supply and since this law is based on the notion of a fixed factor of production it is a short run phenomenon.
Note that the law does not state that total returns will begin to decline, it refers only to the diminution of marginal returns. The common sense of the law may be realised by considering that if it did not apply the whole population could be fed by devoting enough workers to the cultivation of a specific area of land



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