Production Theory pp 287-318 | Cite as
The Law of Diminishing Returns
Abstract
Turgot [11] introduced into economic thought a proposition which has come to be known as the “Law of Diminishing Returns.” Properly stated, it is one of the few generalities of economic theory which might be called a law, prompting Schumpeter [6] to state: “It embodies an achievement that is nothing short of brilliant and suffices in itself to place Turgot as a theorist high above Adam Smith.” Loosely worded, the proposition asserts that as equal quantities of capital and labor are applied successively to a given plot of land, the output resulting from these applications will increase monotonically at first up to a certain point, after which further applications will result in steadily decreasing product increments tending to zero.
Keywords
Production Function Input Vector Proper Subset Output Vector Scalar OutputPreview
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Bibliography
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