Answer to Question #45327 in Economics of Enterprise for ayomide

Question

law of diminishing returns

Answer 1

In 18th century Turgot was the first who formulated the law of diminishing returns, whereby each subsequent investment in it of the labor and capital is burden of diminishing increase in crop yield. In any natural plant community soil and plants growing on it form a stable autoregulatory loop with negative feedback in the form of streams of water and mineral and organic substances. But when it comes to agriculture, for which the most important characteristics such as soil fertility, crop plants, the number of dead remains of plants and humus, it turns out that they form a closed loop of positive relationships. The system is in an unstable equilibrium, since the loss of topsoil due to erosion or removal of the crop plants without subsequent return to the soil of nutrients needed are enough to start the process of soil degradation and loss of productivity of plants. This vicious circle, or rather a vicious spiral received at one time called the law of diminishing returns.