ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The law of diminishing returns refers to increasing one input in a production process while other inputs remain constant. As each new unit of the increasing input is added, the marginal output gets smaller.

Detailed explanation-2: -Diminishing Returns: Stage of production where output increases at a decreasing rate as more units of a variable input are added.

Detailed explanation-3: -Stage 2: Diminishing returns This process culminates with the product reaching its maximum value, meaning that the marginal product becomes zero. Optimum production is set somewhere within this stage. Adding more units of the variable factor after this point will lead to the overall output starting to diminish.

Detailed explanation-4: -The law of diminishing marginal returns states that adding an additional factor of production results in smaller increases in output. After some optimal level of capacity utilization, the addition of any larger amounts of a factor of production will inevitably yield decreased per-unit incremental returns.

Detailed explanation-5: -We get increasing returns in the first stage because initially, the fixed factors are abundant relative to the variable factor. The introduction of additional units of the variable factor leads to the effective utilisation of the fixed factors. Evidently, production increases at an increasing rate.