b) Diminishing returns

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Last updated 9:28 PM on 3/3/26
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4 Terms

1
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  • define marginal product

  • output produced from one additional unit of labour

2
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  • explain the law of diminishing marginal returns

  • more variable input (labour) added to fixed input (capital)

  • initially

    • MP increases

    • cost of additional input < revenue from additional output

    • increasing MP = decreasing MC

  • up to a point

    • MP decreases

    • cost of additional input > revenue from additional output

    • decreasing MP = increasing MC

3
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  • n/a

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4
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