An analysis of the law of diminishing returns as a key one in economics

Though it started as an online bookstore, its success in its venture spurred it to diversify into selling anything that can be sold online. Further, Amazon has also expanded globally and now operates around the world through a combination of localized portals and globalized delivery and logistics platforms. The way in which Amazon has leveraged technology as a source of competitive advantage and reaped the benefits of the economies of scale in addition to leveraging the synergies between its internal resources and external drivers has spawned many rivals who aim to imitate and better its business model.

An analysis of the law of diminishing returns as a key one in economics

It is used to explain many of the ways the economy works and changes. It is a relatively simple idea; spending and investing more and more in a product where one of the factors of production remains the same means the enterprise will eventually run out of steam.

The returns will begin to diminish in the long run. If more fertilizer and better machinery are used on an acre of farmland, the yield will increase for a while but then begin to slow and become flat.

A farmer can only get so much out of the land, and the more the farmer works, the harder it gets. The economic reason for diminishing returns of capital is as follows: When the capital stock is low, there are many workers for each machine, and the benefits of increasing capital further are great; but when the capital stock is high, workers already have plenty of capital to work with, and little benefit is to be gained from expanding capital further.

For example, in a secretarial pool in which there are many more secretaries than computer terminals, each terminal is constantly being utilized and secretaries must waste time waiting for a free terminal.

In this situation, the benefit in terms of increased output of adding extra terminals is high. However, if there are already as many terminals as secretaries, so that terminals are often idle and there is no waiting for a terminal to become available, little additional output can be obtained by adding yet another terminal.

An analysis of the law of diminishing returns as a key one in economics

Another application for this law is in Athletics, for runners, their investment is the time and energy put into training and the yield is hopefully improved fitness. Early in their running careers or early in the training program a couple of weeks of regular trainingDiminishing returns, also called law of diminishing returns or principle of diminishing marginal productivity, economic law stating that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output.

Economics (/ ɛ k ə ˈ n ɒ m ɪ k s, iː k ə-/) is the social science that studies the production, distribution, and consumption of goods and services.. Economics focuses on the behaviour and interactions of economic agents and how economies work.

Microeconomics analyzes basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions.

In economics, the law of diminishing marginal utility states that the marginal utility of a good or service declines as its available supply increases. Economic actors devote each successive unit. How Rich Countries Got Rich and Why Poor Countries Stay Poor [Erik Reinert] on plombier-nemours.com *FREE* shipping on qualifying offers.

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Introduction. Amazon is the world’s largest online retailer and is indeed a pioneer in the online retailing space. Though it started as an online bookstore, its success in its venture spurred it to diversify into selling anything that can be sold online.

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Increasing and Diminishing Returns – Africa’s Opportunity to Develop – Developing Economics