Theory question 109
Basic Agricultural Economics(a) State the law of diminishing returns as it applies to agricultural production.
The table shows, for a 2 ha farm, the quantity of fertilizer used (bags) and yield of maize (bags): 0 – 8; 8 – 24; 12 – 48; 16 – 80; 20 – 120; 24 – 150; 28 – 170; 32 – 180; 34 – 180; 36 – 170.
(b) Complete the table (change in quantity of fertilizer and change in yield of maize).
(c) Draw a graph from the provided data and use it to explain the law of diminishing returns.
Show the model answer
(a) When more and more units of a variable input are added to fixed inputs, the extra output from each additional unit eventually falls (and total output may later fall)
(b) Change in fertilizer: –, 8, 4, 4, 4, 4, 4, 4, 2, 2
Change in yield: –, 16, 24, 32, 40, 30, 20, 10, 0, −10
(c) Graph of yield (vertical) against fertilizer (horizontal): rises steeply up to 20 bags (increasing returns), rises more slowly from 20 to 32 bags (diminishing returns begin after 20 bags, where extra yield falls from 40 to 30), levels off at 32–34 bags (maximum 180 bags, zero extra yield) and falls at 36 bags (negative returns)
Fill both change columns, then point to where the extra yield starts to fall.