Marketing: Law Of Diminishing Returns and Economics

The Law of Diminishing returns also called the Law of Diminishing Marginal Product and the Law of Variable Proportions, is the principle that states as successive increments of a variable resource(labor) are added to a fixed resource (capital and land) the marginal product of the variable resource will eventually decrease.  This law assumes that technology is a fixed entity, and each successive worker has the same innate ability, motor functions, education, training, and work experience.

Units Of     Variable Resource	Total       Product	Marginal Product	Average Prodcut
0	0
1	10	10	10
2	25	15	12.5
3	45	20	15
4	60	15	15
5	70	10	14
6	75	5	12.5
7	75	0	10.71
8	70	-5	8.75

1. Units of variable resource: Labor
2. Total Product(TP): is the total quantity, or total output of a particular good produced.
3. Marginal Product (MP): is the extra output or added product associated with adding a unit of variable resource, to the production process.  It can also be represented as a mathematical notation; MP= change in total product/ change in labor input
4. Average Product (AP): also called labor productivity, is output per unit of labor input.  This to can be expressed with a formula; AP= total product/units of labor

This table shows that in the short run, a company can increase output by adding units of labor, but in the long run each successive unit of output will cause negative marginal returns.  Finding the right balance is the key to marginal success.  This is an economic based topic but it is in response to a query posted earlier this week.  I know that this question was for a school project.  I hoped that this helped getting you on your way to the answer.