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Question

What Are the Limitations of the Law of Diminishing Returns?


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Solution

The following are the limitations of the law of diminishing returns:

  1. This law, although considered to be useful in production activities, cannot be applied universally in all production scenarios. It becomes a constraint in cases where products are less natural. This law is most significant in agricultural production.
  2. It assumes that all units of a single factor of production must be identical, which is difficult to apply in practical applications.

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