Diminishing Returns Flashcards
1
Q
Diminishing Returns
A
The decrease in the marginal output of as the quantity of a single factor of production is increased
e.g. Hiring more workers eventually could cause inefficiencies and our total output increases by a lower amount on every new worker added (marginal product decreases)
2
Q
Marginal Product
A
The increase in total output when one more unit of variable factors is employed e.g. workers
