Question

How does Diminishing Returns operate in agriculture? Do you feel that this neoclassical proposition would hold good in a world where we seldom operate with fixed input levels of all other factors ? illustrate your answer with examples

Answer 1

The law of the diminishing returns to the variable factor of production is best suited to the agriculture. Although fixed input is a rare case in now a days, the model come up with the assumption of short run possibility. As the increase in the overall output become less than the increasing expansion in labour force, the marginal and average productivity fall. Law of increasing return is not fit for agriculture because the marginal product of fixed input is negative there. As a farmer starts cultivating with one labourer ,the fixed land may be more than enough to him ,but as he starts employment of more and more labourer the point comes the marginal product falls as output increases. This neoclassical production neglects the technical progress.

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