DECREASING MARGINAL RETURNS: In the short-run production of a firm, an increase in the variable input results in a decrease in the marginal product of the variable input. Decreasing marginal returns typically surface after the first few quantities of a variable input are added to a fixed input. Compare this with increasing marginal returns. You should also compare this with diseconomies of scale associated with long-run production. See also | short-run production | law of diminishing marginal returns | fixed input | variable input | marginal product | average product | total product | short-run production | long-run production |
