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Diminishing marginal returns

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  • Tanya Shivariundefined Offline
    Tanya Shivariundefined Offline
    Tanya Shivari
    wrote on last edited by admin
    #1

    phenomenon in which greater input of effort, money, etc. yields smaller results. Crucial part of the idea is that if youre using x to get y results (where y is the thing you want). then additional input a will yield additional results b, but not in the same proportion as before.
    On average, before, you put in x to get y, so your yield was y/x. But if you increase x by amount a, then your results will be y b, where
    (y b)/(x a) < y/x
    and this will only get worse.
    [Diminishing marginal returns] ([DMR]) is used to explain why the supply curve in economics slopes upward, i.e., increasing the quantity supplied requires an increased price of most things.
    Sometimes DMR is more than offset by [economies of scale], which allows more of a thing to be supplied more cheaply than a small amount.

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