Thread: consider a firm that produces wheat with land and labour discuss and contrast diminishing returns?

explain why it is important to have diminishing returns for one input and constants returns to scale for both inputs?


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you have a loaded question
the only reason it is important to have what you stated is so the math works out. ie If you had constant returns of a single input you could produce an infinite amount, doesn't make much sense does it. It is not that you want it to happen it, we make that assumption in economics because it seems to describe the world.
I will say the constant return for 2 inputs is not a common assumption. It may be made in an introductory class but it is not needed to describe what happens. It is normally used in intro classes so you can get constant opportunity costs and some other nice properties that make things easier to understand

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