Law Of Diminishign Returns

Question 1

What is the short run

Answer 1

The short run is when there is one factor of production which is fixed which makes firms restricted

Question 2

What is the long run

Answer 2

The long run is defined as when all factors of production are variable

Question 3

What is the law of diminishing returns

Answer 3

The law of diminishing returns states that when adding variable factors of production to fixed factors of production, the returns form the variable inputs will rise and then fall

Question 4

What causes these dimishign returns

Answer 4

-It is caused by the constraints of the fixed factor of production (capital)
- workers cannot be as efficient as there are nto enough resources to accommodate everyone working as productive as possible

Question 5

What is marginal gains and when does it occur

Answer 5

• marginal gains is when there is an increase in product from adding on more worker
• this occurs in the underutilisation of resources and specialisation