Question

What Is Meant by the Law of Diminishing Returns?

Answer 1

Law of diminishing returns or law of diminishing marginal productivity in economics is a law that states that when one factor of input is increased while keeping the other factor constant, then there will be a decline in the output of the product with respect to per unit of added input.

In other words, when one factor of production is increased incrementally while all other factors are kept constant, then there will be an increase in the productivity at first, but as the input is raised further incrementally, it will result in decline of the output and ultimately it will become negative.

Also read:

• Meaning of Demand and Factors Affecting Demand
• Law of Variable Proportion
• The Law of Diminishing Marginal Product and the Law of Variable Proportions

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