Illustrate and discuss with examples the law of diminishing returns Essay

Illustrate and discuss with examples the law of diminishing returns - Essay Example Cannan (1981) says that while the great British economist Malthus has been given a large part of the credit for discovering this law, it was Turgot who actually considered it in its application to the field of agriculture. Turgot writes that: â€Å"Where ordinary good cultivation prevails, the annual advances bring in 250 to the hundred, it is more than probable that if the advances were increased by degrees from this point up to that at which they would bring in nothing, each increment would be less and less fruitful (Cannan, 1981, Pg. 74)†. The law of diminishing returns was likened by Turgot to a spring which is forced to stretch due to the load of weights on it. As more and more weights are added to the spring, the relative extension starts decreasing until there comes a point where no further extension can be made to the spring (Cannan, 1981). The ideas given by Turgot can be simplified by using his own agricultural example but giving it a more modern complexion. For instance, given that we know that x amount of seed in one hectare of land would produce 3y of crop, we could assume that doubling the amount of seed would produce 2(3y) of crop i.e. 6y, if everything else remains the same. However, once the amount of seed is doubled, the output crop may not be exactly double and we could end up with a crop which is equal to 4y or 5y. If the amount of seed was further increased to 3x the returning crop amount could be 4.5 y or even less. In this manner, the marginal return from each additional unit of seed would become lesser and lesser until the marginal result would become close to zero. Even though it was Turgot who suggested the ideas behind this law of economics, Malthus popularized the concept with his Essay on the Principle of Population which was published in 1798 and discussed many different economic concepts (Cannan,