Question

What are diminishing marginal returns?

Short answer

The notion of diminishing returns is used in economics to describe how a decline in marginal output affects the production process. It is the quantity of a single production component that is commonly related to progressively increased variables that are amounts of all other production factors that can also remain constant.

Step-by-step solution

Step 1

The diminishing returns process is defined as the employment of an additional factor to help with production that results in a relatively smaller rise in output. This is also known as diminishing returns, which describes how one component is fixed in the short run (e.g. capital). The law of diminishing marginal returns illustrates how adding an extra factor of production will result in a lesser gain in output

Step 2

For example, how the factory employs workers would reflect how the manufacturing process considers the products through which the company functions and how they can function at their best. This also aids in maintaining a production factor that is dictated by.