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# What is law of diminishing returns with diagram?

## What is law of diminishing returns with diagram?

Law of diminishing returns explains that when more and more units of a variable input are employed on a given quantity of fixed inputs, the total output may initially increase at increasing rate and then at a constant rate, but it will eventually increase at diminishing rates.

## What is the formula to calculate depreciation using the diminishing balance method?

Journal entry for Diminishing Balance Method of Depreciation

1. Purchase of asset. Asset A/c. Dr. xx. To Cash/ Bank/ Creditor’s A/c. xx. (Being asset purchased)
2. Charge Depreciation. Depreciation on Asset A/c. Dr. xx. To Asset A/c. xx. (Being depreciation charged on book value of asset)
3. Transfer Depreciation.

What is the diminishing method?

In diminishing balance method, depreciation is calculated on book value of the asset at the start of the year instead of principle amount with fixed percentage. In this, the percentage is same but depreciation amount gradually decreases as it is done on book value.

### How to calculate diminishing returns?

How to Calculate Marginal Return on an Investment. Determine the cost of the investment. Divide the profit made from the sale of the securities by the cost of the investment. Determine the marginal return on investment for an additional \$1,000 in profit.

### What is the principle of diminishing returns?

diminishing 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.

What is law of diminishing returns?

The law of diminishing returns is an economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain at a constant. As investment continues past that point, the return diminishes progressively.

#### What is diminishing marginal returns, why does it occur?

The first worker adds two goods. If a worker costs £20.

• The 3 rd worker adds six goods. The MC of those six units are 20/6 = 3.3
• The 5 th worker adds an extra ten goods. The MC of these 10 is just 2.
• After the 5 th worker,diminishing returns sets in,as the MP declines. As extra workers produce less,the MC increases.