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LAW OF DIMINISHING MARGINAL RETURNS: A principle stating that as more and more of a variable input is combined with a fixed input in short-run production, the marginal product of the variable input eventually declines. This is THE economic principle underlying the analysis of short-run production for a firm. Among a host of other things, it offers an explanation for the upward-sloping market supply curve. How does the law of diminishing marginal returns help us understand supply? The law of supply and the upward-sloping supply curve indicate that a firm needs to receive higher prices to produce and sell larger quantities. Why do they need higher prices?
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MARKET SUPPLY The combined supply of everyone willing and able to sell a good in a market. Market supply is one half of the market. The other is market demand. It is graphically represented by a positively-sloped market supply curve, which can be derived by combining, or adding, the individual supplies of every seller in the market.
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time flipping through mail order catalogs seeking to buy either a green and yellow striped sweater vest or a Boston Red Sox baseball cap. Be on the lookout for celebrities who speak directly to you through your television.
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This isn't me! What am I?
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Approximately three-fourths of the U.S. paper currency in circular contains traces of cocaine.
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"Love looks through a telescope; envy, through a microscope. " -- Josh Billings, humorist
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BEA
Bureau of Economic Analisys
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