Law of diminishing returns?

Question

I've been asked to come up with an example of when the law of diminishing returns does not apply, but I can't think of one. Can anyone help?

Answer 1

Both of the above are wrong. The law of diminishing returns is the observation that under certain circumstances improvements are convex in their costs. If the costs are actual costs, then this must be true, but if your marginal costs are zero or nearly zero, you are small (not an IBM or Fidelity Magellan Fund), and the markets are not completely competitive or have a regulatory defect, then you can get convex return. In such a case, you should purchase infinite amounts of the good.

Imagine the case where you can buy the first pizza for $12, the second for $6, and each beyond the second for $4. The solution would then depend upon satiation. For example, if you are an individual you would experience diminishing or even negative returns in the sense that you could only eat so much pizza before become ill. However, if you were a fraternity buying pizza, your costs would be increasing for each pizza, but your average return per unit would not be dimenishing and your marginal costs would not be decreasing and then level out. Provided you did not order beyond satiation and all the pizza was consumed, you would avoid the law of diminishing returns.

And just a note to the above, reading the bible would in fact have diminishing returns as familiarity increased and knowledge improved, each additional reading would add less knowledge than when it was read for the first time. And to the extent it provided infinite returns on the first reading, any additional reading is a maintenence expense.

Answer 2

OPM has answered your question very well with a very little scope for others.
Some add ons : junk food, pepsi, coke, chocolates etc. the more u eat the more craving is there for them & the more satisfaction guranteed.
workouts- whatever time & effort u'll spend on workouts accordingly u'll feel the results.
Good movies and good literature.
Referring to the above answers - reading the bible again might not provide more knowledge but if somebody wants to understand religions then definitely reading one of the holy books motivates to read books of different religions or different books on the same religion. And the more a person does R&D , the more knowldege and understanding he gets .
I sincerely hope I have cited proper examples. It has been long since I last studied eco. Couldnt stop myself from answering ur question. Always paid attn to the law & never thought of going across the table.

Answer 3

law of diminishing return is simply like you drink a soda when you are thirsty. Imagine the weather was hot and in the midday. You felt thirsty and needed a drink.You took a bottle cold soda. The first bottle you have will give you the highest value. Then if you took the other one, you still obtain value but not as same as the first one or you still satisfy but not as much as that one. Then when you started drinking the third bottle you feel full enough and the fourth you might not drink it. So diminishing is a decreasing value of a product or commodity because of you are consuming it repeatedly in the same time.

Answer 4

the more you comsume ,the less satisfied you get.
take for example, you take a bar of sneakers chocolate, and u were 100% satisfied, den u take another bar, you will be less satisfied compared to the satisfaction you had the first time.this goes on like dat till a point when satisfaction tends to rise again.

Answer 5

buy a vintage Ferrari

Answer 6

are you familiar with the Bible?