Economics A-Level
The Law of Diminishing Marginal Returns
What The Law of Diminishing Marginal Returns means in Economics A-Level, as defined for Pearson Edexcel.
Definition of The Law of Diminishing Marginal Returns
A short-run law stating that as more units of a variable factor are added to a fixed factor, the marginal product will eventually decline, causing marginal and average variable costs to rise.
Topics that use The Law of Diminishing Marginal Returns
- Revenues, costs and profits (Pearson Edexcel A-Level)
Related terms
Using The Law of Diminishing Marginal Returns in the exam
Definition questions usually carry one or two marks, and examiners look for the precise wording. Write the definition from memory, check it against the version above, and then use the term in a longer answer on the same topic so it sticks.
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