Can you provide an example of diminishing returns on the mar

Can you provide an example of diminishing returns (on the margin)?

Solution

The law of diminishing returns state that there will be decrease in marginal output with increase in one factor of production, ceteris paribus.

An example of this law may be that A employee was able to make 5 pizzas and if we add 1 more employee they will be able to make 9 pizzas together keeping other this constant. Now adding one more employee they will make total 12 pizzas. So we can see that overall production is increasing but the additional output by the additional employee i.e. the marginal output is decreasing as we can see that 1st employee made 5 pizzas 2nd employee made only 4 additional pizzas while third was able to contribute only 3 additional pizzas. There might be many reasons for this like, cramped work space, lack of utencils, waiting line to use oven etc.