Withdrawing Marginal Returns

Marginal returns describes the additional output resulting from a one device increase in using variable inputs, although other inputs are usually held constant. Withdrawing marginal returns is a law of economics revealing that, as the amount of new employees raises, the marginal product of an additional employee will eventually be less versus marginal product on the previous employee. Say you can find three tasks in producing a product and your firm hires one worker per task. After the third worker is hired the use of specialization diminish. Following third worker is hired, output increase total output but at a diminished rate. The theory is called downsizing marginal returns.