Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 2: Q14 (page 44)

What are diminishing marginal returns?

Short Answer

Expert verified

Diminishing Marginal Returns state that : Additional increments of resources in a purpose cause marginal benefit from those additional increments to fall.

Step by step solution

01

Basic Concept 

The concept of Diminishing Marginal returns states that : as more & more units of resources are used in production of a commodity, the additional output increase with each successive resource units - keeps on decreasing.

02

Further Explanation & Example 

The concept implies that lesser the existing resources in production of a good, more an additional resource unit will increase its production. And more the existing resources in production of a good, lesser an additional resource unit will increase its production.

Example : When government spends on a purpose, the initial gains from spending are higher than that of further spendings.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Return to the example in Figure 2.4. Suppose there is an improvement in medical technology that enables more healthcare with the same amount of resources. How would this affect the production possibilities curve and, in

particular, how would it affect the opportunity cost of education?

7. Would a research study on the effects of soft drink consumption on children’s cognitive development be a positive or normative statement?

Individuals may not act in the rational, calculating way described by the economic model of decision making, measuring utility and costs at the margin, but can you make a case that they behave approximately that way?

Why is a production possibilities frontier typically drawn as a curve, rather than a straight line?

Explain why individuals make choices that are directly on the budget constraint, rather than inside the budget constraint or outside it.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free