Question

Explain the reasons for: (i) increasing return to a factor (ii) diminishing returns of factor​

Answer 1

The causes for the operation of law of diminishing returns are discussed below:

Fixed Factors of Production: The law of diminishing returns applies because certain factors of production are kept fixed. ...

Scarce Factors: ADVERTISEMENTS: ...

Lack of Perfect Substitutes: ...

Optimum Production:

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Answer 2

Answer:

The causes for the operation of law of diminishing returns are discussed below:

Fixed Factors of Production: The law of diminishing returns applies because certain factors of production are kept fixed.

Scarce Factors: ADVERTISEMENTS:

Lack of Perfect Substitutes:

Optimum Production

Increasing returns to a factor occur because the fixed factor is excessively used in production.