# 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 ?
Non-renewable resources decrease and costs increase, partly a result of the Law of Diminishing Returns (fig.
Again, he keeps it short and sweet, mumbling something about the law of diminishing returns, and is off stage before ten.
Consider the law of diminishing returns in cinema, where sequels that improve on the original are famously limited to The Godfather Part II, Aliens and Breakin' 2: Electric Boogaloo.
But even if you're not among those who suffer agonizing caffeine headaches, your regular intake of the substance assures you will be subject to the cruel law of diminishing returns.
Bonds has 747 home runs, eight short of Henry Aaron's record of 755, and the law of diminishing returns has been wreaking havoc on the Giants slugger's pursuit of the all-time mark.
No marketing venture ever reaches the full limit of the market for its product because the law of diminishing returns prohibits the grossly disproportionate expenditures necessary to reach customers on the outside fringe of a product's market.
There could also be the law of diminishing returns.
Monfasani studies a much later phase of the battle, which was, certainly by then, subject to the law of diminishing returns.
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This is simply the flip side of the law of diminishing returns.
Big booths are impressive, but the law of diminishing returns will apply.
Its very thoroughness -even the textual variants in reprints of early reviews are catalogued, and the editor's long introduction duplicates much of the material included in other sections-generates inflation, and the law of diminishing returns sets in: the sheer length of the work, with its large pages and small print, will render its most valuable elements difficult of access to all but the most assiduous readers.

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