How does the law of diminishing returns affect marginal and average productivity?
1 Answer
Sep 26, 2015
When there is diminishing returns in production, both Average Product and Marginal Product will fall.
Explanation:
When one variable factor in combination with fixed factors is increased in production after a point both AP and MP of that variable factor will diminish.
As AP falls MP also falls. But MP falls at a faster rate.
This video lesson will help you understand this better.
Law of Variable Proprotions
