Question

Does the Amazon firm follow the rule of diminishing marginal product? and can you explain why?

Answer 1

Law of diminishing marginal product means that advantages gained from slight improvement in the inputs will only advance marginally per unit and may level off or even decrease after a specific point .

In the firm like amazon , the managers find a marginal rate of productiom return per unit produced after making advantageous adjustments to inputs driving production.

When the data of amazon is mathematically graphed this creates a concave chart showing total production return gained from aggregate unit production gradually increasing unit levelling off and potentially starting to fall.

Amazon is gradually increasing the sellers on the site whose gain can be made only marginally , but after sometime there may be negative returns and the firm may start to suffer from these additions.

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