All questions of Factors of Production for Class 10 Exam

Understanding the Law of Diminishing Marginal Returns
The law of diminishing marginal returns is a fundamental principle in production economics. It explains how the addition of inputs in the production process leads to varying levels of output.
Key Concept
- When a firm increases its input, such as labor or capital, while keeping other inputs constant, the increase in output will not continue at the same rate.
- Initially, as more units of labor or capital are added, output increases significantly.
- However, after a certain point, adding more units results in smaller and smaller increases in output.
Example Scenario
- Consider a farm that grows crops. If the farmer adds more workers to a fixed piece of land, the total output may rise sharply at first.
- Yet, as more workers are hired, they may start getting in each other's way, leading to less efficient production.
- Eventually, each additional worker contributes less to total output than the previous one did.
Implications in Production
- This principle indicates that simply adding inputs is not a sustainable way to increase production indefinitely.
- Firms must consider the optimal level of resource allocation to maximize efficiency and productivity.
Conclusion
The law of diminishing marginal returns highlights the importance of balance in production. Understanding this concept helps businesses make informed decisions about resource use, ultimately leading to better economic outcomes.