Class XI, Principles of Economics, "Why does Law of Diminishing Returns apply to Agriculture?"
Why does Law of Diminishing Returns apply to Agriculture?
law of diminishing returns specially applies to agriculture and other
extractive industries. One thing that is common to all these industries
is the supremacy of nature. It is therefore often remarked that the part
that nature plays in production corresponds to diminishing returns and
the part which man plays confirms to the law of increasing returns. The
reason is that, nature where it is supreme is subject to diminishing
returns, while industry where man is supreme, is subject to increasing
return. Besides the supremacy of nature, there are several other reasons
why agriculture is subject to the law of diminishing returns.The
agricultural operations are spread out over a wide area, and supervision
cannot be very effective. Scope for the use of specialized machinery is
also very limited. Therefore economics of large scale production cannot