Do diminishing returns necessarily mean economic inefficiency?

Answer 1

No, diminishing returns do not necessarily mean economic inefficiency. By contrast, diminishing returns usually create a condition where a marginal benefit = marginal cost condition is achieved and results in a stable, non-infinite equilibrium. It would be inefficient to produce over or under this equilibrium, but the nature of production functions do not ensure inefficiency.

Answer 2

Diminishing return can lead to inefficiency in an economy because when input in an economy is not checkmated, it is bound to culminate into less achievement in its productive sector