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Law of Diminishing Returns: Definition & Examples

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

The Law of Diminishing Returns states that as one input variable is increased, there is a point at which _____.

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1. At what unit of fertilizer does the Law of Diminishing Returns set in?

2. When increasing one input variable leads to a decrease in actual output, not just marginal output, this is known as

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About This Quiz & Worksheet

This quiz and corresponding worksheet will help you gauge your knowledge of the law of diminishing returns. Topics on the quiz will include understanding what the law of diminishing returns states as well as knowing how to apply it to a given situation.

Quiz & Worksheet Goals

Use this macroeconomics worksheet and the corresponding quiz to review:

  • The law of diminishing returns
  • Problem involving application of this law
  • What it's called when increasing one variable causes a decrease in actual output
  • Whether the law is more applicable in the long or short run
  • How adding employees to help with a rush could cause a café to experience negative returns

Skills Practiced

This worksheet and quiz will let you practice the following learning skills:

  • Interpreting information - verify you can read information regarding when the law of diminishing returns is more applicable and interpret it correctly
  • Knowledge application - use your knowledge to answer questions about when the law is most applicable
  • Problem solving - use acquired knowledge to solve story problems associated with the law of diminishing returns

Additional Learning

To learn more about how to optimize production, review the lesson called Law of Diminishing Returns: Definition & Examples. This lesson will help you:

  • Understand what the law of diminishing returns is
  • Identify the relationship between input and output in the law
  • Explain how a farm or cafe can be affected by this type of returns
  • Describe how to determine a company's negative returns
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