EconomicsMadeCool

Applications of theoretical economic concepts in the real world   (the law of increasing returns and the law of diminishing returns)   Intro:     Does the Law of Increasing Returns make sense?  Does it have a real-world application? Yes, and yes!   Hopefully, by the end of this article you will have some idea as to how the laws of increasing returns and decreasing returns work, but for now, a brief intro. These laws help companies make decisions on their expenditure. For example,  a clothes manufacturing company can decide how many workers to hire so that it can maximise its profits. For these laws to work, we operate under the assumption that all other factors in the market remain constant (in simpler terms, stuff like the salary you pay each worker, the total number of machines the company has)   These laws can be used by anyone and everyone and are often used in the real world, but we don’t actually see them...