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For each additional item that you get it has incrementally less value to you.


I like to use chocolates as an example. Suppose I have a bag of chocolate candy and suppose that I am selling pieces of candy out of the bag to you and you really really like chocolate candy and I am the only person in the world who sells it. Also suppose for purposes of my example you must eat the candy right away.


Lets say now, for example you are willing to pay me five dollars for one of the pieces of candy and you eat it. Not completely satisfied you want another piece of candy but this time the piece is not worth $5 to you it is now worth $4. The third piece is worth $3 and so on... Eventually a piece of candy will suddenly be be worth $0 because you will not want any more even if it is free. In fact, if you do take pieces once they become free you will probably begin getting sick. At that point I would actually have to start paying you to get you to eat the candy!

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14y ago
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9y ago

Decreasing marginal return is when on the increase in variable input, the marginal product of the variable input decreases. This results due to short run production of the firm.

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Q: What is decreasing marginal return?
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Continue Learning about General History

Why does marginal utility decrease?

Law of diminishing marginal utility states that equal additions to a good provide smaller and smaller increases in total utility, therefore marginal utility decreases. Lets use apples for an example. The first apple is very satisfying and adds a lot of utility, say 100 total utility. If you have a second apple, it is less satisfying, and adds 80 to make 180 total utility. A third apple adds only 50 utility, to make 230 total. Total utility is increasing at a decreasing rate. Therefore, the marginal utility (satisfaction) between each apple is decreasing, which illustrates the law of diminishing marginal utility.


What is increasing returns to a factor?

It occurs when an additional unit of labour employed brings a marginal product greater than the previous marginal product.


Price equals marginal utilty?

Generally, yes. Marginal utility is the utility one gets out of "one more" of a good. For instance, if I have no food, my marginal utility of a loaf of bread is extremely high, so I will pay (price) a huge amount of money for it. On the other hand, if I have a pantry full of loafs of bread, my marginal utility for a loaf of bread would be very low, and I wouldn't buy bread unless it was extremely cheap.


What are the marginal branch and posterior interventricular branch branches of?

right coronary artery


Why is the population of nagasaki decreasing?

The number of employees in the primary industry has been decreasing, and that of the secondary and tertiary industries has been slowly increasing thus the population of Nagasaki decreases since 1960.

Related questions

What is Decreasing return?

what is the different between diminishing marginal productivity and decreasing return to scale?


Why is the Marginal cost curve downward sloping?

Marginal cost curve is u-shaped curve, this is due to law of variable proportion(return to factors), firstly, there is an increasing return (i.e, decreasing cost) then there is a stage of constant returns (i.e, constant cost) then lastly comes the stage of decreasing returns (i.e increasing cost), that`s why marginal cost curve first slopes downward and then slope upward and become u-shaped.


Why law of diminishing returns and return to scale might use in understanding the output decisions of firms in different industries?

show with example that if the marginal product is always decreasing the average product is always above the marginal product?


What occurs when someone buys a third winter coat?

Decreasing marginal utility


What occurs when somebody buys a third winter coat elasticity substitution decrease marginal utility or efficient production?

decreasing marginal utility


What could occur when someone buys a third winter coat?

decreasing marginal utility


What are increasing marginal returns?

ncreasing marginal returns mean that marginal product is greater for each subsequent unit of a variable input than it was for the previous unit. Decreasing marginal returns, as such, mean that marginal product is less for each subsequent unit of a variable input than it was for the previous unit.


Why avc curve U shape?

Overall because of diminishing marginal returns. The marginal cost curve, MC, decreases until diminishing marginal returns set in and and it begins to increase. When the MC is below the AVC, the AVC must fall. When the MC is above the AVC, the AVC must rise. In otherwords, if the marginal cost is decreasing the average cost must be decreasing as well and vice versa.


What if the following describes a situation in which there would be a decreasing marginal utility?

Buying a second winter coat.


Difference between marginal efficiency of investment and marginal efficicency of capital?

MEC is the expected rate of return on capital and MEI is the expected rate of return on investment.


Describe a situation in which there would be decreasing marginal utility?

A situation in which there would be decreasing marginal utility would be:buying a new car when you already have two carsBuying a second winter coatordering a second dessert when you're already full


How does marginal revenue and marginal utility relate to capital?

Marginal revenue/margina utility return from capital represents the benefit of capital. When determining the optimal amount of capital, we must take into account the point when marginal benefit = marginal cost. This optimises profit/utility.