Concept of the law of diminishing marginal returns


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Question 1) Explain the factors that may cause economies and diseconomies of scale. Give an example of each.

Question 2) Explain the economic concept of the law of diminishing marginal returns. Please give an example. Why is this important?

Question 3) Why is the equality of marginal revenue to marginal cost essential to profit maximization in all of the market structures? Explain the decision-making process when MR is greater than MC and when MC is greater than MC. Why does a manager want to operate at a capacity where MR=MC?

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Microeconomics: Concept of the law of diminishing marginal returns
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