Diminishing returns to a variable input refers to a stage in production when with the employment of more and more units of the variable factor with the given fixed factor , the marginal product decreases and total product increases at a diminshing rate.
The main 2 reasons for diminishing returns to a variable input are:
a. Over utilisation of fixed factor : With the increase in variable factor along with the fixed factor eventually a position comes when the fixed factor has its limit and starts yielding diminshing returns.
b. Improper coordination : After a level of employment, the production process becomes very crowded with the variable input and the factor proportion becomes less suitable for production.
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