The Law of Marginal Productivity
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This paper defines the law of marginal productivity, providing examples from agriculture to explain it. The paper examines how this law affects the retail stores. The paper explores the trend to consolidation among department stores and contends that the increased revenues from the consolidated stores will increase profits for the company, consolidate costs and lessen at least some of the fixed costs for the formerly individual department stores and thus eventually increase sales and stimulate lagging productivity.
From the Paper:"In theory, the more demand there is for a good or service, the more a producer wishes to provide this good, and that producing in bulk lowers costs. Even when consumer demand is down, a supplier can also produce more, in the hopes of defraying a decrease in price with a bulk increase in sales. However, certain costs of production are fixed. In other words, the Law of Marginal Productivity holds constant. This economic law states, namely that "when the technology of production and some of the inputs are held constant and the quantity of a variable input increases continually, the marginal productivity of the variable input will eventually decline." (King, 2004)"
Cite this Business Plan:
The Law of Marginal Productivity (2005, October 31) Retrieved April 20, 2021, from https://www.academon.com/business-plan/the-law-of-marginal-productivity-61899/
"The Law of Marginal Productivity" 31 October 2005. Web. 20 April. 2021. <https://www.academon.com/business-plan/the-law-of-marginal-productivity-61899/>