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Chapter 2: Q 14 (page 44)

What are diminishing marginal returns?

Short Answer

Expert verified

We add additional increments of resources to producing a good or service, the marginal benefit from those additional increments will decline.

Step by step solution

01

; Definition

It states that as a consumer consumes more and more standard units of a good, Marginal utility derived from an additional unit goes on diminishing.

02

; Example

If a consumer consumes one burger he will be much satisfied and will desire for second burger. However the satisfaction derived from second burger will be less than first burger which shows utility will goes on decreasing with more and more consumption of burger on same day.

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