Law of Diminishing Returns: In the short run, as more of a variable input is added to a production process with at least one fixed input, output increases at a decreasing rate.

   This is strictly a short run phenomenon since there are no fixed factors in the long run. Whenever you add another friend (a variable input) output goes up. The added output of a variable input is known as the marginal product of the input. Marginal product is declining not because your friends are getting worse, but because more have to share the fixed factors. We could also call this the Law of Diminishing Marginal Product.

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