# diminishing returns

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Fig. 46 Diminishing returns. The rise and fall of units of output as units of variable factor input are added to the production function.

## diminishing returns

the law in the SHORT-RUN theory of supply of diminishing marginal returns or variable factor proportions that states that as equal quantities of one VARIABLE FACTOR INPUT are added into the production function (the quantities of all other factor inputs remaining fixed), a point will be reached beyond which the resulting addition to output (that is, the MARGINAL PHYSICAL PRODUCT of the variable input) will begin to decrease, as shown in Fig. 46.

As the marginal physical product declines, this will eventually cause AVERAGE PHYSICAL PRODUCT to decline as well (diminishing average returns). The marginal physical product changes because additional units of the variable factor input do not add equally readily to units of the fixed factor input.

At a low level of output, marginal physical product rises with the addition of more variable inputs to the (underworked) fixed input, the extra variable inputs bringing about a more intensive use of the fixed input.

Eventually, as output is increased, an optimal factor combination is attained at which the variable and fixed inputs are mixed in the most appropriate proportions to maximize marginal physical product. Thereafter, further additions of variable inputs to the (now overworked) fixed input leads to a less than proportionate increase in output so that marginal physical product declines. See RETURNS TO THE VARIABLE FACTOR INPUT

References in periodicals archive ?
The third level of saturation is even more difficult than the second level for technical reasons, while the fourth level of saturation is the "final frontier" and the space where the true law of diminishing returns in fact applies--the economic cost-effectiveness level.
China's economic growth in terms of percentage is certainly lower than in previous years, a normal progression with maturing economies and inevitable with the law of diminishing returns.
The law of diminishing returns leads one to expect the return on each additional unit of capital to decline.
But the law of diminishing returns saw excitement tail off through Revenge of the Fallen (2009) and Dark of the Moon (2011).
The problem with this strategy is that these subsidies (and others which are not listed here) are fuelling ever higher London land and property prices, and taxpayer investment in infrastructure then becomes subject to the law of diminishing returns - for the taxpayer if not the property developer.
The Bluetones' back catalogue has guaranteed Mark's solo credentials as an accomplished songwriter but by the time their final album, A New Athens, was released in 2010, the four-piece had to acknowledge the law of diminishing returns.
It's called the law of diminishing returns and it's particularly acute when it comes to education.
Last year, proof of the Law of Diminishing Returns, only The Times marked the occasion of my 65th and I only found THAT out because Farmer Morebottle, reading his iPad while ploughing by satnav, spotted the mention and called me to jeer.
Above that, I find the law of diminishing returns kicks in, whether manifesting itself in ineffective performance or ill-health.
Most new inventions could be chucked in the bin, As the law of diminishing returns sets in.
He has to be aware of the law of diminishing returns.
As a result, further expansion is likely to be affected by the law of diminishing returns, and stated expansion targets such as the EU's 20 per cent renewables target by 2020, look difficult to achieve.

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