Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I am having difficulty understanding the concepts in this problem. Can you assist
Expert Solution

Step 1: Define Law of Diminishing returns
Law of diminishing returns: It refers to an economic principle under which when a firm increases its investment the output increases at the first stage. The second stage occurs when the production of the firm reaches the maximum level of production. The third stage of production occurs when the production starts to decrease in the firm. The output of the firm depends on the level of production.
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