theory of returns of a factor
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According to this theory, under the given circumstances as a firm adds successive units of variable factors to the fixed factor of production, marginal return increases and eventually diminishes.
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The law of diminishing marginal returns is a theory in economics that predicts that after some optimal level of capacity is reached, adding an additional factor of production will actually result in smaller increases in output. ... The law of diminishing returns is related to the concept of diminishing marginal utility.
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