Economics: Diminishing Returns and Increasing Marginal Cost

Title: Diminishing Returns and Increasing Marginal Cost
Discipline(s): Economics
Authors: Donna Anderson, TJ Brooks, Lisa Giddings, University of Wisconsin-La Crosse
Submission Date: Fall 2003

Goal of the lesson: To understand how the concept of marginality is linked to supply by examining the concept of diminishing returns and evaluating its effect on marginal cost.

Rationale for the goal: Evidence that students are completing the principles of microeconomics course with less understanding of the supply side of a market compared to the demand side includes significantly lower scores on exams covering supply-side concepts, and evidence from the intermediate microeconomics course.  This concern led us to focus on an essential microeconomic concept identified by our department the previous year:  diminishing returns in production and its effect on marginal cost.

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