Law of diminishing returns
More generally, marginal and average products do not have to decline over the en- tire range of output. Indeed, many production functions display increasing marginal and average products over some ranges. However, most production functions reach a point after which the marginal product of an input declines. This observation often is called the law of diminishing returns (or law of diminishing marginal product), which states that the marginal product of a variable factor eventually will decline as its use is increased. To illustrate this principle, consider the classic example of farm- ing a plot of land. Land is fixed at 1 acre, and no output can be harvested without any workers. If 10 bushels of grain can be produced by one worker, the marginal product of the first unit of labor is 10 bushels. The change in output might be even greater as the firm moves from one to two workers. For instance, two workers might be able to produce 25 bushels of grain by working together and specializing in various tasks. The marginal product of labor is 15 bushels and thus, over this range, marginal product is increasing. Eventually, as the firm continues to add more workers, while holding land fixed, output will grow at a slower rate.