Law Of Diminishing Returns

Question 1

Diminishing Marginal Returns

Answer 1

In the Short run, as more of a factor of production is added the marginal returns on that factor will decrease

Question 2

Short-run Only

Answer 2

They only occur in the short run when only one factor of production is fixed

Firms don’t experience diminishing marginal in the Long-run as all factors of production are variable

Question 3

Returns to Scale

Answer 3

Measures output changes in response to a firms input changes

Question 4

Increasing Returns to Scale

Answer 4

When the % change in output is greater than the % change in input

Question 5

Constant Returns to Scale

Answer 5

When the % change in output equals the % change in input

Question 6

Decreasing Returns to Scale

Answer 6

When the % change in output is less than the % change in input

Question 7

Increasing Returns to Scale and Economies of Scale

Answer 7

Increasing Returns to scale will mean there’s also Economies of Scale

Question 8

Decreasing Returns to Scale and Dis-economies of Scale

Answer 8

Decreasing Returns to Scale will mean there’s also Dis-economies of Scale