Kategooria logistika - 1 õppematerjal

Law of Diminishing Returns

What is the law of diminishing returns? Why this proposition is called a "law"? It states that, at some point- when we add more variable input to a fixed input- our marginal product will start to decrease as the newly added variable input is being added to an already increasingly scares input. This can be explained by citing an example, if we add more workers to a job, such as assembling a car. At some point, adding more workers would cause problems, as they would be getting in each other's way, or workers wold often find themselves waiting for access to specific part or tool required for the job. This proposition is called a law because it is standardized and applicable on all the production processes. Any manufacturing and production company can use this proposition (or Law) to their betterment. Is Tony right in his analysis of the situation? Explain. According to my point of view, Tony's decision of increasing the price a g...