definitions

• What does the Law of Diminishing Marginal Returns state?

  Output decreases with each additional input unit
• What does Diminishing Marginal Returns refer to?

  The point where marginal output starts to decrease
• What is an example of Diminishing Marginal Returns in farming?

  • Adding labor increases wheat production initially
  • Eventually, marginal output decreases with more labor
  • Factors causing this include:
  • Overcrowding
  • Confusion and inefficiencies
  • Higher supervision costs
• Why does marginal output decrease as more labor is added?

  Due to overcrowding and inefficiencies
• What happens to the marginal cost of production as quantity supplied increases?

  Marginal cost of production increases
• Why do suppliers demand a higher price as quantity supplied increases?

  To compensate for increasing marginal costs
• How does the Law of Diminishing Marginal Returns affect the supply curve?

  • Causes the supply curve to slope upward
  • Reflects increasing marginal costs of production
  • Leads to higher price demands for output
• What is the relationship between the Law of Diminishing Marginal Returns and the supply curve?

  The law causes the supply curve to slope upward
• What does an upward sloping supply curve indicate?

  Increasing marginal costs of production
• What leads to a higher demand for price in the context of the supply curve?

  Increasing marginal costs of production
• What are the key points of the Law of Diminishing Marginal Returns and its effects?

  • Additional output decreases with more input
  • Marginal output decreases after a certain point
  • Causes upward sloping supply curve
  • Leads to higher prices due to increased costs