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Describe the law of diminishing marginal returns. How does it relate to the shape of the marginal Enter question
cost (MC) curve? (Use diagram, if needed)

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The law of dimishing marginal returns is also referred as the law of dimishing returns, the principle of
diminishing marginal productivity and the law of variable proportion. Snap a photo from your
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Among several laws of production , the Law of dimishing returns is the oldest and universal law. It
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establishes a relationship between input and oputput and points out that with every increase in input, link
output has a tendency to decline under certain circumstances. The classical economists associated this law
with agriculture as they thought that this law is most suitable for agriculture due to its closeness with
nature. 888-888-8888 Text me
Defnition by Alfered Marshall- " An increase in capital and labour applied in the cultivation of land causes
in general a less than proportionate increase in the amount of produce raised, unless it happens to By providing your phone number, you agree to receive a one-time
coincide with an improvement in the arts of agriculture" automated text message with a link to get the app. Standard
messaging rates may apply.

Assumption of the law:-

The law will function only under the following assumptions:-

1. The law is applicable if one factor of production is kept constant or xed. My Textbook Solutions

2. The unitts of the factors used should be homogenous or identical.

3. The technique of production remains constant

4. Upto a certain point in the earlier stages of cultivation, increasing returns may be obtained. This does not
mean that the law is invalid. It only means that land is not efficiently used. But after a certain point is
reached diminshing returns operates. Economics Microecono... Advertising...
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Operation of the law:- Let us suppose a farmer, having a plot of land measuring 10 acres, he is interested
to increase output from his land by investing more and more on capital and labour. View all solutions

Let us assume that a unit of capittal and labour is of Rs 100. Now we have to study how the inputs when
increased in successive doses result in extra output. Land is kept xed and the inputs i.e labour and capital
are made variable faactors. Pls refer the attached table.

As per the table

(a) Total output or Total Returns:- is the total output of the produce from the total doses of capital and
labour applied. Column 2 of the table gives total returns from the total inputs.

(b) Average Output or Average Returns:- refers to the output per unit of capital and labour invested. This is
arrived by dividing the total output by the total units of the input. Column 3 of the table gives the average
output which is decreasing.

(c) Marginal Output or Marginal Returns :- refers to the output due to an addition unit of input being used.
It refers to the extra output due to the extra input used. Column 4 refers to the marginal output.

Marginal cost curve shape:- Marginal cost is the increase in cost caused by producing one more unit of the
good. The Marginal cost curve is U shaped because intially when a rm increases its output total costs and
variable costs start to increase at a dimishing rate, then as output rises, the Marginal cost increases.

Conclusion:- The law works not only in agriculture but also in other elds such as manufacturing industries.
The law will operate in all elds where one or more factors of production are xed while other factors are
variable. It was Prof Edgeworth who rst pointted out that it

has a universal application.

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