In manufacturing, after a certain point, as production capacity increases, the return gained for each new unit of capacity decreases. This is the law of diminishing marginal returns. In the 澳洲幸运5官方开奖结果体彩网:short run, increasing production capacity may be a prohibitive business cost and may completely prevent further expansion. The law of diminishing marginal returns is highly dependent on the 澳洲幸运5官方开奖结果体彩网:law of supply and demand. The law of supply and demand states that increasing 澳洲幸运5官方开奖结果体彩网:consumer spending✃ demands may drive up prices enough to justify production improvements that were previously too expensive.

Marginal retur🃏ns may be calculated using Excel to help determine if additionalꩲ production would result in prohibitive expenses.

Calculating Diminishing Marginal Returns ♒in Excel

To calculate the diminishing marginal return of product production, obtain values for the 澳洲幸运5官方开奖结果体彩网:production cost per unit of production. A unit of production may be an hour of employee labor, the cost of a new works🉐tation or another value. Different businesses and꧃ different industries may have unique costs and production needs.

1. After determining which production cost value to use, create an Excel spreadsheet column titled "Total Production." 
2. Place the values in the next column, giving the top row a title based on the type of production cost unit used, such as "Dollars per Hour," with a new row for each value.
3. In the "Production Cost" column, put a value in each row indicating how many of each product is now produced or choose another value for each row showing the production capacity gained by adding each unit.

Example

For example, hiring the first employee costs $15 per hour of production and creates 20 products per hour. In this case, the first column should have a row with the values 20 and 15. Entering another set of values, such as $15 an hour and 30, provides an opportunity to calculate the return and see if the margin is changing.

For these first two employees, the margin remained the same, with each producing 15 products for a total of 30. The third employee, however, costs $15 per hour, but the total production only increased by 12, to a total of 42. The returns are now diminᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚishing, as the production per employee fell from 15 products per hour to only 12 products per hour.