Category: Forex Trading

Figure 8.3 “Increasing Marginal Returns, Diminishing Marginal Returns, and Negative Marginal Returns” shows the ranges of increasing, diminishing, and negative marginal returns. Clearly, a firm will never intentionally add so much of a variable factor of production that it enters a range of negative marginal returns. Acme experiences diminishing marginal returns beyond the third unit… Continue reading Diminishing Marginal Returns vs Returns to Scale

The relationship between average product and marginal product is similar. However, unlike your course grades, which may go up and down willy-nilly, marginal product always rises and then falls, for reasons we will explore shortly. As soon as marginal product falls below average product, the average product curve slopes downward. While marginal product is above… Continue reading 8 1 Production Choices and Costs: The Short Run Principles of Economics

Marginal cost in Panel (b) is the slope of the total cost curve in Panel (a). The production function relates the maximum amount of output that can be obtained from a given number of inputs. While it might seem like the law of diminishing returns only applies in business, the law is applicable in our… Continue reading Law of Diminishing Marginal Returns: Definition, Example, Use in Economics

This idea can be understood outside of economics theory, for example, population. The population size on Earth is growing rapidly, but this will not continue forever (exponentially). Suppose Acme’s present plant, including the building and equipment, is the equivalent of 20 units of capital. Average total cost then declines, as the fixed costs are spread… Continue reading Diminishing Returns SpringerLink

Consider a hypothetical firm, Acme Clothing, a shop that produces jackets. During the period of the lease, Acme’s capital is its fixed factor of production. Acme’s variable factors of production include things such as labor, cloth, and electricity. In the analysis that follows, we shall simplify by assuming that labor is Acme’s only variable factor… Continue reading What is the law of diminishing returns?

One worker might cut the cloth, another might sew the seams, and another might sew the buttonholes. Their increasing marginal products are reflected by the increasing slope of the total product curve over the diminishing marginal returns implies first 3 units of labor and by the upward slope of the marginal product curve over the… Continue reading Law of Diminishing Returns: AP® Economics Review