Law of diminishing returns
When increasing amounts of one factor of production are employed in production by fixing some other production factor, after some level, the resulting increases in output of product become lower and lower. That is, first the marginal returns to consecutive little will increase within the variable issue of production turn down, then eventually the general average returns per unit of the variable input begin decreasing. The law of diminishing returns doesn't imply that adding a lot of an element can decrease the whole production, a condition called negative returns, though actually this can be common.
There is a simple example in farming. A garden of length 20 feet and breadth 20 feet plot gives a variety of pounds of tomatoes if the gardener simply puts within the counseled variety of rows and plants per row, waters them properly and keeps the weeds pulled. If the gardener ...view middle of the document...
Applying 3 pounds of fertilizer should increase the harvest, however maybe by solely an awfully little over the yields on the market exploitation simply 2 pounds. Applying four pounds of fertilizer seems to be overdoing it -- the garden yields fewer tomatoes than applying solely 3 pounds as a result of the plants begin to suffer injury from root-burn. And 5 pounds of fertilizer seems to kill nearly all the plants before they even flower. There is an example that so many cooks spoil the dish. Its funny example but real.
There are some reasons for causing law of diminishing returns. Limited capability of the organization and management results in diminishing returns and also increase of variable factor whereas alternative factors are remained constant might cause decrease. Fixed productive capability of the firm -if the firm is overstrained as a lot of and a lot of variable factors are added this cause the diminish returns. Normally constant state of technology may result in diminishing, if technology alters the law is delayed.
The law of diminishing returns is rooted in the work of the 18th century French Physicist Anne Robert Jacques Turgot. He defined the law in terms of monetary expenditures and proportions, not inputs and marginal output. Although Adam Smith visited with Turgot on the continent, he did not incorporate the notion of diminishing returns in his own work. But within a three-week period in 1815, David Ricardo, Thomas Malthus, Edward West, and Robert Torrens independently published tracts in which they developed the law of diminishing returns and applied it to land rent. Many scientists studied and done researches on this law.
The law of diminishing returns is important as a result of it's a part of the premise for economists' expectations that a firm's short-term marginal cost curves can slope upward because the number of units of output will increase. And this successively is a vital part of the premise for the law of supply's prediction that the quantity of units of product that a profit-maximizing firm will wish to sell increases because the value getable for that product will increase.
Sources: Wikipedia, auburn.com etc