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What does the law of diminishing marginal returns refer to in production?
- a)The total production of a country increases indefinitely
- b)Adding more labor or capital increases output at a decreasing rate
- c)The demand for goods will always meet supply
- d)Increasing land leads to more output
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
What does the law of diminishing marginal returns refer to in producti...
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.
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.
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What does the law of diminishing marginal returns refer to in producti...
The law of diminishing marginal returns states that as more of a variable input (like labor or capital) is added to a fixed input (such as land), the additional output produced will eventually decrease. This principle emphasizes the importance of balancing input levels to maintain productivity.
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What does the law of diminishing marginal returns refer to in production?a) The total production of a country increases indefinitelyb) Adding more labor or capital increases output at a decreasing ratec) The demand for goods will always meet supplyd) Increasing land leads to more outputCorrect answer is option 'B'. Can you explain this answer? for Class 10 2025 is part of Class 10 preparation. The Question and answers have been prepared according to the Class 10 exam syllabus. Information about What does the law of diminishing marginal returns refer to in production?a) The total production of a country increases indefinitelyb) Adding more labor or capital increases output at a decreasing ratec) The demand for goods will always meet supplyd) Increasing land leads to more outputCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Class 10 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What does the law of diminishing marginal returns refer to in production?a) The total production of a country increases indefinitelyb) Adding more labor or capital increases output at a decreasing ratec) The demand for goods will always meet supplyd) Increasing land leads to more outputCorrect answer is option 'B'. Can you explain this answer?.
What does the law of diminishing marginal returns refer to in production?a) The total production of a country increases indefinitelyb) Adding more labor or capital increases output at a decreasing ratec) The demand for goods will always meet supplyd) Increasing land leads to more outputCorrect answer is option 'B'. Can you explain this answer? for Class 10 2025 is part of Class 10 preparation. The Question and answers have been prepared according to the Class 10 exam syllabus. Information about What does the law of diminishing marginal returns refer to in production?a) The total production of a country increases indefinitelyb) Adding more labor or capital increases output at a decreasing ratec) The demand for goods will always meet supplyd) Increasing land leads to more outputCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Class 10 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What does the law of diminishing marginal returns refer to in production?a) The total production of a country increases indefinitelyb) Adding more labor or capital increases output at a decreasing ratec) The demand for goods will always meet supplyd) Increasing land leads to more outputCorrect answer is option 'B'. Can you explain this answer?.
Solutions for What does the law of diminishing marginal returns refer to in production?a) The total production of a country increases indefinitelyb) Adding more labor or capital increases output at a decreasing ratec) The demand for goods will always meet supplyd) Increasing land leads to more outputCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for Class 10.
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