The importance of law of diminishing returns?

Answer 1

As a teacher in Economics, I find that the law of diminishing returns is among the most important and useful concept that everyone should understand. In Economics, the law of diminishing returns appears in the topic dealing with costs. Where any additional workers or variable input added in to the production process will lead to a fall in the quantity produced, in the short run or when at least one factor of production is fixed. However the law of diminishing returns doesn't only have relevance in costs. It's also useful for students to understand this law, as it applies to their study as well. Some student will continue to study for many hours hoping to absorb the knowledge from books or class lecture, however with no break time or sufficient rest, the law of diminishing also applies, where the amount of knowledge absorbed will slowly diminish. This means when the student is fresh or just started the lesson, they can absorb the knowledge like a sponge, as the hour passes by, the knowledge will be absorbed less. Another example that I always tell my students is when they are doing their exam question. Some students will spend a lot of time on one question, believing that the more time or effort spent on the question will mean more marks. At some point, this is true and possible, after a certain point, the effort or time spent may not be worth the effort. For example, lets say there is an essay question which is worth 10 marks. With this mark, the student may have spent 1 hour writing it and a lot of effort to produce the answer. However if the student continue to spend more hours or resources to write it, it can come to a stage where the information is excessive, and it also discourages the student to focus on other important things. This is when the diminishing return sets in. The importance of diminishing returns is to allow individuals to understand that there is a stage or point where returns or benefits of doing something will slowly diminish.