The relationship between marginal return and total return

The relationship between marginal return and total return

The relationship between marginal return and total return can be understood as follows:

Marginal return refers to the increase in output (or the benefit) that results from adding one unit of input (or resources). On the other hand, total return refers to the total increase in output (or benefit) from all units of input (or resources).

When the marginal return decreases at a diminishing rate, it means that each additional unit of input results in a smaller increase in output. This could lead to a situation where the total return also decreases, but it is not a guarantee. It all depends on the rate at which marginal return is decreasing and the overall shape of the production function.

If the marginal return decreases slowly, the total return can still increase, albeit at a decreasing rate. However, if the marginal return decreases quickly, the total return may eventually start to decrease, even if it had been increasing previously.

In summary, while a diminishing marginal return can have an impact on the total return, the relationship between the two is complex and depends on the specifics of the situation.

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