I don’t know how to handle this Economics question and need guidance.
Another important law in economics is the “law of marginal returns or the law of increasing costs”. Discuss in terms of your study in this course, how might you know that you are at a point of diminishing returns, or where more study will not benefit you like it did before? Can you identify any of the costs discussed in this lesson in your decision about how much study is enough?
As we saw, firms must deal with the law of diminishing marginal returns (also referred to as the principle of diminishing marginal productivity). This exists because as more and more of a variable input is added to the production process, and at least one other input is fixed, the variable input will eventually experience a decline in marginal productivity. Ultimately, there can come a time when the company actually experiences a negative marginal return with increased production.
TOTAL PRODUCT: INCREASING, DIMINISHING, AND NEGATIVE MARGINAL RETURNS.
This graph is an example of a total product graph that demonstrates what happens at a jacket factory when production continues to rise. When the factory initially increases labor units the marginal production (represented by the distance between points B and C on the graph) is larger than that between points A and B.
However, when the fifth unit of labor (point E) is added the increase between points D and E is smaller than the increase in production between points C and D. This marks the point of diminishing returns, as each additional unit of labor added will return progressively lower marginal returns, until at one point marginal returns go negative (represented by the addition of the eighth worker (point H on the graph) where marginal returns start to go negative.
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