Question

The decline in marginal productivity experienced when input usage increases, holding all other inputs constant, is known as:

Answer 1

The answer is:

The law of diminishing marginal returns

Step-by-step explanation:

The law of diminishing marginal returns states that the addition of one factor of production, holding other inputs constant results in an inevitably decreased yield per unit incremental returns. The law implies the reduction in efficiency of the additional input of a factor of production beyond an optimum point, which results in a smaller increase in output. For example, if a factory employs workers continuously, the volume of production increases steadily until it gets to an optimum where the efficiency of the workers is maximum. Further increase in the number of workers beyond this point results in a negative efficiency, which results in a decrease in the unit output, hence a diminished return.