law of diminishing returns

E781042

economic principle microeconomic concept production theory concept

The law of diminishing returns is an economic principle stating that as more of a variable input is added to a fixed set of resources, the additional output produced from each extra unit of input eventually decreases.

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Observed surface forms (1)

Surface form	Occurrences
Law of diminishing marginal productivity	1

Statements (48)

Predicate	Object
instanceOf	economic principle ⓘ microeconomic concept ⓘ production theory concept ⓘ
alsoKnownAs	diminishing returns ⓘ principle of diminishing marginal returns ⓘ
appliesTo	production processes ⓘ short run ⓘ
assumes	at least one factor of production is fixed ⓘ other factors of production are held constant except the variable input ⓘ technology is constant ⓘ
category	laws of production ⓘ
clarifies	difference between short run and long run in production theory ⓘ
distinguishedFrom	diminishing marginal utility ⓘ
doesNotRequire	total output to fall immediately when marginal product declines ⓘ
exampleDomain	adding more fertilizer to a fixed plot of land ⓘ adding more machines to a fixed factory space ⓘ adding more workers to a fixed amount of land ⓘ
formalizedIn	19th century economics ⓘ
hasConsequence	beyond a certain point additional input can reduce total output ⓘ explains upward sloping short run supply curves ⓘ optimal input use occurs before marginal product becomes negative ⓘ
historicallyAssociatedWith	David Ricardo NERFINISHED ⓘ Thomas Robert Malthus NERFINISHED ⓘ Turgot NERFINISHED ⓘ
holdsWhen	production capacity is constrained by fixed factors ⓘ
implies	marginal cost eventually rises as output increases ⓘ marginal product of a variable factor eventually decreases ⓘ total output increases at a decreasing rate after some point ⓘ
influences	firm hiring decisions ⓘ input substitution decisions ⓘ shape of cost curves in microeconomics ⓘ
involves	fixed input ⓘ variable input ⓘ
mathematicallyExpressedAs	declining first derivative of output with respect to a variable input beyond some point ⓘ
relatedTo	average product ⓘ marginal cost curve ⓘ marginal product ⓘ short run production function ⓘ total product curve ⓘ
statesThat	as more units of a variable input are added to fixed inputs the marginal product of the variable input eventually declines ⓘ
teaches	more of an input is not always proportionally better ⓘ
usedIn	agricultural economics NERFINISHED ⓘ cost analysis ⓘ firm production decisions ⓘ industrial organization ⓘ input optimization ⓘ resource allocation analysis ⓘ
violatedIf	technological improvements occur with additional input ⓘ

Referenced by (2)

Full triples — surface form annotated when it differs from this entity's canonical label.

Brooks's law → relatedConcept → law of diminishing returns ⓘ

this entity surface form: Law of diminishing marginal productivity

Amdahl's law → relatedTo → law of diminishing returns ⓘ