Apr 21 2012

Diminishing marginal returns

Published by at 7:05 pm under

The principle which says that as more of a variable resource (usually labor) is added to fixed resources (land and capital), the output attributable to additional units of the variable resource declines as more and more is added. Explained by the fact that in order for workers to remain productive as more workers are hired, more capital is needed. Without more capital, productivity declines as labor is added to production.


About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

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