Question

Where can the "Law of diminishing returns" be observed?

Where can the "Law of diminishing returns" be observed?

Homework Answers

Answer #1
The law of diminishing returns states that when a single factor of production
is increased keeping all other factors constant, there is a decrease in the marginal (incremental) output of the production process.
The law of diminishing marginal returns can be observed in a software company hiring workers to write code for a given project.
As the code keeps increasing, the company hires more workers. However after a point in time the extra code that a new worker
will decrease as the number of workers keeps increasing. This is because of the following factors:
1) inefficiency
2) overcrowding
3) supervision of the management of a larger workforce.
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