Strictly Concave Production Functions and Diminishing Average Product
The phenomenon of diminishing average product is a universal property of any production function that is strictly concave. This mathematical shape means the function increases at a decreasing rate. This guarantees that the average product of an input will fall as the quantity of that input is increased, because each additional unit of input contributes less than the average of the previous units.
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Figure 1.8c: A Graphical Illustration of Diminishing Average Product of Labour
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Learn After
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