Explain a business example to explain the concept 'diminishing marginal return'. please go in detail \

Explain a business example to explain the concept 'diminishing marginal return'.

please go in detail

\

Expert Solution

ANSWER: Generally Law of diminishing marginal returns states that adding an additional factor of the production will result in the smaller increase in output. For instance Company 'X' generates or produces laptops at 200 laptops per day capacity with 50 working labors and capital invested is $50,000 which is being used as machines. By keeping capital as constant for suppose if X increases workers from 50 to 60 the production of laptops increases from 200 to 223 laptops per day. At present 60 labors and 220 laptops is the optimum productivity for 'X' and increasing another input will give low results which furtherly will give decreasing results such as like increase of 70 labors to 80 will result in 223 laptops only and that additional 10 labor input will be the extra cost.

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Rahul Sunny answered 2 years ago

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