Bill lives in Montana and likes to grow zucchini. He applies fertilizer to his crop twice during the growing season and notices that the second layer of fertilizer increases his crop but not as much as the first layer. What economic concept best explains this observation?

Question

Quizplus · Accepted Answer

The observation can be explained by the law of diminishing returns, which states that the marginal (additional) output decreases as more units of a variable input (such as fertilizer) are added to a fixed amount of other inputs (such as land and labor). This means that the first application of fertilizer likely provided a larger increase in yield than the second application, as the soil had already been enriched by the first application.

Bill Lives in Montana and Likes to Grow Zucchini