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Essay / Research Paper Abstract
This 3-page paper explains the law of diminishing returns and provides examples. Bibliography lists 3 sources.
Page Count:
3 pages (~225 words per page)
File: D0_MTlawdimis.rtf
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Unformatted sample text from the term paper:
large companies allocate resources) or microeconomics (the same thing, but restricted to households and individuals), economics is a social science focusing on rational behavior.
As a social science, economics has certain generalizations. The better-known among these is the law of diminishing returns, also known as the law of variable proportions.
In its most basic form, the law states that when increasing amounts of one factor of production are employed in production, along with
a fixed amount of another production factor, at some point, the resulting output increases in product output becomes smaller (Johnson, 2005). The
law (or generalization, as its also referred to) assumes that the available quantity of one factor of production is fixed at a given level (Johnson, 2005). It also assumes that
technological knowledge doesnt change during the relevant period (Johnson, 2005). Though the law of diminishing returns is typically applied to firms and
how much of a good they produce, we can also see this law at work in the non-manufacturing sector. For example, a gardener working a 20x20 plot will produce a
certain of pounds of tomatoes if he puts in the recommended rows, the correct plants per row, and takes care of them (Johnson, 2005). If the gardener adds a pound
of fertilizer to the soil, but keeps everything the same, he will likely end up increasing the yield (Johnson, 2005). But if he adds two pounds of fertilizer to the
soil, the increase of tomatoes produced by going from one pound to two pounds will be smaller than the increase achieved by going from zero pounds to one poind (Johnson,
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