Exam Question by Jonathan Chan

Decreasing Returns

JonathanChan — 2014-01-15 01:57:12 UTC

Diminishing returns is the idea that increasing input and will give you a less than proportionate increase in output

Law of Diminishing Returns

JonathanChan — 2014-01-15 01:57:59 UTC

The law of diminishing returns is the law that states that as long as there is a fixed input in a production process, the marginal return will decrease

The Difference

JonathanChan — 2014-01-15 02:05:15 UTC

Diminishing returns is a component of law of diminishing returns, not all of it. Though the law exists, it is completely possible for a production process to be experiencing increasing returns for a period before coming to the section where diminishing returns occurs.

Decrease in short run due to fixed costs causing bottleneck

Decrease in long run caused by diseconomies of scale

JonathanChan — 2014-01-15 17:17:56 UTC

Time Frame

JonathanChan — 2014-01-15 17:21:00 UTC

Decreasing returns happen in the long run

Law of diminishing returns happens in the short run

JonathanChan — 2014-01-16 03:09:04 UTC

JonathanChan — 2014-01-16 03:12:35 UTC