Diminishing Returns

… a core term used in Economic Analysis and Atlas102

Definition

The Economist defines diminishing returns as the more you have, the smaller is the extra benefit you get from having even more.

The Economist goes on to say:

“[Diminishing returns is also known as diseconomies of scale. For instance, when workers have a lot of capital giving them a little more may not increase their productivity anywhere near as much as would giving the same amount to workers who currently have little or no capital. This underpins the catch-up effect, whereby there is (supposedly) convergence between the rates of growth of developing countries and developed ones. In the New Economy, some economists argue, capital may not suffer from diminishing returns, or at least the amount of diminishing will be much smaller. There may even be ever increasing returns.”

Atlas topic, subject, and course

Supply, Demand, and Equilibrium (core topic) in Economic Analysis and Atlas102 Economic Analysis.

Source

The Economist, Economics A-Z, at http://www.economist.com/economics-a-to-z/d#node-21529622, accessed 30 April 2016.

Page created by: Ian Clark, last modified 30 April 2016.