Law of diminishing marginal returns chalapathi v (2)
DEPARTMENT OF ECONOMICS
I BSc (AGRI)
• This law also called “ The Law Of Increasing
• Simply we call LDMR.
• When more workers are added to a given
amount of fixed factors ,the fixed factors are
more fully utilized ;so marginal product(MP)
rises initially .Efficiency will decline, leading
to diminishing marginal product.
• “We will get less and less extra output when
we add additional doses of an input while
holding other inputs fixed. In other words, the
marginal product of each unit of input will
decline as the amount of that input increases
holding all other inputs constant."
• The concept of LDMR introduced by Jackques
Turgot, Johann Heinrich Von Thunan, Thomas
Malthus, David Ricardo.
• Karl Marx developed a version of the LDMR in
his book CAPITAL volume III
• Diminishing returns and Diminishing marginal
returns are not the same thing.
• Diminishing marginal returns means the MP
curve is falling.
• The output may be either negative or positive.