Comments on: Easy way to explain Diminishing Marginal Returns

By: david masila

david masila — Mon, 22 Nov 2010 14:17:38 +0000

hi,
can i see a diagram showing an example of diminishing marginal return please?

By: Chan Wai Hai

Chan Wai Hai — Sun, 13 Apr 2008 07:43:39 +0000

I would be glad that you have the time and spirit to make this web page to show us what the ‘diminishing returns’ is. However, I cannot find any convincing calculation and just find several native style firms that we cannot clearly understand the theory of the diminishing returns the stuff is ! I hope you spend more time on the reading and in quotation from different scholars to show the specific terms. The sustainable inputs (eg. Labour, equipments scale, land etc. ) can have the greatest output(s) by the plan with the concept “Least-Cost Factor Combination For A Given Output” . Most people who have ever studied economy realize the stuff of this economic terms. I hope you can explain more by your text or the diagrams to the people who don’t know Economics!

By: My Boaz's Ruth

My Boaz's Ruth — Tue, 08 Nov 2005 18:41:54 +0000

Actually, my husband and I have determined that Ruth Chris’s steak is NOT worth the price.

We find the best quality for the price on steak is at Jimmie Mac’s Steakhouse. Ruth Chris’s steak does not taste at all better, and is a LOT more expensive.

By: Noah Kagan

Noah Kagan — Mon, 07 Nov 2005 22:03:56 +0000

Okay let’s just say I am dealing with a new way to look at diminishing marginal return and we can all it diminishing quality relative to price from now on. yes i know the definition and that dmr deals with inputs and value not the quality of an item. I wrote this piece more about the idea of how the value of things decline relative to price as you get higher.

By: Sean

Sean — Mon, 07 Nov 2005 09:13:39 +0000

No, your Y-axis is labeled “Quality” and Masa steak is shown with a lower Y value indicating not that quality/dollar has decreased but that the ACTUAL QUALITY has decreased. This is not diminishing marginal returns but actually negative marginal returns which violates monotonicity (the fundamental principle that “more is better”).

To repeat, your graph shows that the ABSOLUTE quality of Masa steak is lower than Ruth Chris, not RELATIVE quantity/dollar. To illustrate what you were trying to show, Masa should have had a higher Y-value, but your curve should have had a positive first derivative and a negative second derivative.

By: Noah Kagan

Noah Kagan — Mon, 07 Nov 2005 05:55:51 +0000

Hey Sean,

I think this graph/explanation do agree with your statements. The graph displays the marginal qualities and your point is completely shown here where the Masa steak is great but the marginal improvement from Ruth Chris is at a lower rate. Hence there is a diminishing marginal rate from Ruth Chris to Masa relative to price.

By: Sean

Sean — Mon, 07 Nov 2005 05:03:21 +0000

huh? Your diagram is flat wrong – it doesn’t illustrate diminishing MU, it demonstrates NEGATIVE MU. The quality of steak doesn’t DECREASE between $50 and $150, it just increases at a slower rate…

By: Cap

Cap — Fri, 04 Nov 2005 01:06:42 +0000

I feel sorry for people not in California (or a few locations in Nevada and Arizon).. missing out on In-n-Out burgers.