What causes diminishing returns? According to economists, what is “diminishing returns” to an input? What causes diminishing returns? Have you ever observed this principle at work in a job you’ve had? Describe how you’ve experienced this concept in the real world.

Diminishing returns is one of the economic principles. It states that suppose one of the
production units in the production process is increased and all others held constant, it will reach a
point when the input’s additions produce smaller or diminished output. However, the law does
not imply that increasing a single production factor results in decreased total output. Diminishing
returns are caused by several factors, including fixed factors of production, scarcity of resources,
and lack of perfect substitutes.

Diminishing returns

The factors of production, namely land, labor, and capital, cannot all be increased
simultaneously. For example, when capital is increased, all other factors must remain fixed and
vice versa. Similarly, land as a factor of production is limited in nature and cannot be increased.
The limited nature of land influences diminishing returns. Moreover, each production factor is
unique and cannot fully act as a substitute for another factor. Therefore, the absence of
substitutes and perfect substitutes, for that matter, influences diminishing returns.

I have ever experienced the principle of diminishing returns at my workplace. I once
worked in a restaurant as a waiter, and the management decided to increase waiters. This created
problems in the restaurants as we would get into each other’s way from time to time during
peaks. Other times we were too idle as there were only a handful of customers to serve. In this
example, you find that the restaurant’s management increased only one factor, labor, and held all
other factors constant, causing diminishing returns. This is how I experienced diminishing
returns in the real world. APA