Answer to Question #287639 in Microeconomics for mina

Question

⦁ Explain the Law of diminishing return and why is it applicable especially in agriculture sector?

Answer 1

The Law of diminishing return is an economic law stating that if one input in the production of a commodity is raised while all other inputs remain constant, a point will eventually be reached where more of the  input result in increasingly smaller, or decreasing, output increases.

In the Agricultural sector, this law applies. For example, land is a fixed input in the short run. The quantity of land is fixed and there is no substitute of land. Land cannot be increased or reduced. Therefore, as more variable factors are employed with the fixed factors, the marginal product falls and hence the law of diminishing returns hold.