{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Law of Diminishing Returns

Law of Diminishing Returns - input X holding its use of...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Law of Diminishing Returns 1. Malthusian entry. 2. Law of Diminishing Returns. 3. The Future. 4. Technical efficiency. Thomas Malthus “An Essay on the Principle of Population” (1798). • Breeding leads to exponential population growth. • Food supplies cannot grow that rapidly. Only starvation (and wars and disease) will check population growth, so poverty is inevitable. Law of Diminishing Returns Law of Diminishing Returns: As a firm increases its use of any one
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: input X, holding its use of other inputs constant, eventually the marginal product of input X declines. The marginal product of input X is the additional output produced by using one more unit of input X. Technical Efficiency A firm achieves technical efficiency when it is producing its current quantity of output at the lowest possible cost. The LDR implies that, to achieve technical efficiency: a firm must balance its inputs carefully....
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern