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Category: Business
Word Count: 408
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Law of dimishing returns

Law oF Diminishing Returns

The Law of diminishing returns is a key one in economics. It is used to explain many of the ways the economy works and changes. It is a relatively simple idea; spending and investing more and more in a product where one of the factors of production remains the same means the enterprise will eventually run out of steam. The returns will begin to diminish in the long run. If more fertilizer and better machinery are used on an acre of farmland, the yield will increase
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