Diminishing marginal returns
What Diminishing marginal returns means in Economics A-Level, as defined for AQA.
Definitions of Diminishing marginal returns
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Reference: AQA
As a firm adds variable factors to a fixed factor, marginal cost initially falls but eventually rises, creating a U-shaped marginal cost curve.
What firms eventually face when they alter output in the short run by changing variable factors, such as labour.
The law that makes the Marginal Cost curve U-shaped in the short run.
Topics that use Diminishing marginal returns
- Costs of production (AQA A-Level)
- The law of diminishing returns and returns to scale (AQA A-Level)
Related terms
- Economies of scale
- Factors of production
- Short run
- Capacity constraints
- Cost curve geometry
- Costs of production
- Factor inputs
- Factor prices
Using Diminishing marginal returns in the exam
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