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State and explain the law of increasing returns

      

State and explain the law of increasing returns

  

Answers

Wilfred
The law of increasing returns is also called the law of diminishing costs, The law of increasing return states that when more and more units of a variable factor is employed, while other factor remain fixed, there is an increase of production at a higher rate. The tendency of the marginal return to rise per unit of variable factors employed in fixed amounts of other factors by a firm is called the law of increasing return. An increase of variable factor, holding constant the quantity of other factors, leads generally to improved organization. The output increases at a rate higher than the rate of increase in the employment of variable factor.
Isocost line is a locus of all combinations of factors the firm can purchase with a given monetary cost outlay.

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Wilfykil answered the question on March 7, 2019 at 06:03

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