Does law of diminishing returns apply only to agriculture?

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Does law of diminishing returns apply only to agriculture?

diminishing returnsTable of Contentsdiminishing returns

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  • Article HistoryHome Politics, Law & Government Economics & Economic Systems

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  • Academia - The Theory of Diminishing ReturnsPrint CiteverifiedCiteWhile every effort has been made to follow citation style rules, there may be some discrepancies. Please refer to the appropriate style manual or other sources if you have any questions.Select Citation StyleCopy CitationShareShareShare to social mediaFacebook TwitterURLhttps://www.britannica.com/topic/diminishing-returnsFeedback External WebsitesFeedbackCorrections? Updates? Omissions? Let us know if you have suggestions to improve this article (requires login).Feedback Type Your Feedback  Submit FeedbackThank you for your feedback

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  • Academia - The Theory of Diminishing ReturnsAlternate titles: principle of diminishing marginal productivityBy The Editors of Encyclopaedia Britannica  Edit History

Table of ContentsRelated Topics:economics productivity marginal productivity theory...(Show more)See all related content

diminishing returns, also called law of diminishing returns or principle of diminishing marginal productivity, economic law stating that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output.

In the classic example of the law, a farmer who owns a given acreage of land will find that a certain number of labourers will yield the maximum output per worker. If he should hire more workers, the combination of land and labour would be less efficient because the proportional increase in the overall output would be less than the expansion of the labour force. The output per worker would therefore fall. This rule holds in any process of production unless the technique of production also changes.

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Early economists, neglecting the possibility of scientific and technical progress that would improve the means of production, used the law of diminishing returns to predict that as population expanded in the world, output per head would fall, to the point where the level of misery would keep the population from increasing further. In stagnant economies, where techniques of production have not changed for long periods, this effect is clearly seen. In progressive economies, on the other hand, technical advances have succeeded in more than offsetting this factor and in raising the standard of living in spite of rising populations.This article was most recently revised and updated by Adam Augustyn.Learn something new every day One Good Fact: a fascinating nugget of information, delivered to your inbox daily.Enter your email SubscribeBy signing up for this email, you are agreeing to news, offers, and information from Encyclopaedia Britannica.
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