Answer to Question #320441 in Macroeconomics for Hes

Question

2. Define the law of diminishing returns. Why is this law considered a short-run phenomenon?

Answer 1

The law of diminishing returns states that holding technology and other factors constant, as more of a a variable factor is added to a fixed factor, output per unit declines after a certain point.

This phenomenon is a considered a short run phenomenon because in the short run, some of the factors of production vary while some are fixed. Adding more variable factors to the fixed factor(s) becomes uneconomical as time goes on because the fixed factors can no longer accommodate the increasing variable factors.