What is the law of diminishing marginal returns?

The law of diminishing marginal returns is also referred to as the "law of diminishing returns," the "principle of diminishing marginal productivity," and the "law of variable proportions." This law affirms that the addition of a larger amount of one factor of production, ceteris paribus, inevitably yields decreased per-unit incremental returns.

What is an example of the law of diminishing returns?

Below are examples of the law of diminishing returns. Suppose that a factory produces a certain good given by the following equation: Q = -L3 + 27L2 + 15L Where, Q is the quantity of production L is the input in terms of labor Describe if the law of diminishing returns applies. If yes, how? Solution:

What are some examples of diminishing marginal returns?

Another example of diminishing marginal returns could be with regard to wealth. As your wealth increases, initially, your happiness rises as you are able to buy food to eat and a place to live. But, after a certain level of wealth, gaining more wealth doesn’t lead to any rise in happiness. As the old saying goes “money can’t buy happiness”.