Discussion Response

Discussion Responses
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Discussion Responses
According to McAuliffe (2015), the law of diminishing marginal utility posits that as one increases the consumption of a good within a specific period, the additional satisfaction one derives from an additional unit of the good declines, when keeping consumption of other products constant. The law applies to even free goods such that when one visits a public beach for the first time, they would highly enjoy, but the more frequently they visit subsequently, the more likely they would have lower satisfaction. Similarly, after holding one’s breath underwater, one would highly appreciate the first breath of unpolluted air. However, the second and subsequent breaths would each bring lower satisfaction rates than the previous ones.
It is possible to have a situation where a free good would yield a negative marginal utility. For example, when one is thirsty and is given some free bottles of water to quench the thirst, they would get satisfied up to a certain point, where they would no longer take more water as it would be harmful to their bodies.According to Boyes and Melvin (2014), the law of diminishing returns outlines that when an additional unit of a variable factor is added to a fixed factor, the additional relative output will at first rise drastically, it would then increase slowly and then eventually drop. For example, when one wishes to employ extra waiters in a café to serve more customers during a busy season.

Hiring the first few workers would lead to a significant additional rise in output, but when the level of staff reaches a certain point, the additional output will start decreasing due to the lack of space in the café that would leave most of them unproductive. The waiters are the variable factors, while the size of the café is the fixed factor in the short-run.
According to Boyes and Melvin (2014), the diminishing returns occurs only in the short-term as there are no fixed factors in the long-term, however, in the short-run, there are fixed factors. It would be advisable to continue producing goods despite the diminishing marginal returns so long as the marginal positive is positive to maximize revenue.
References
Boyes, W., and Melvin, M. (2014). Fundamentals of Economics. (6th ed). Mason, OH: South-Western, Cengage Learning.
McAuliffe, R. E. (2015). Diminishing Marginal Utility. Wiley Encyclopedia of Management, 1-1.