Although you might have heard this expression when describing dysfunctional team situations, this refers to something else. The words: diminishing marginal products are not very exciting to think about, which is why, instead of unloading jargon, I decided to make an analogy.
‘Tis the holiday season, and with excitement come preparations of your favourite sweet and savoury foods. First, you start off by baking gingerbread, then your grandma comes in to make mashed potatoes. Minutes later, your cousin rushes in to heat up the soup using the stove. Your uncle comes to defrost some meat and suddenly, it feels a lot more difficult to work and be productive.
Assuming you have an average sized kitchen, you went from having all that space all to yourself to now being forced to share not just space but also appliances. Not ideal.
So wouldn’t your task of baking gingerbread cookies take longer, as you’d have to move around and share the stove, counterspace or oven with others? Even though, in the beginning it seemed like more was getting done, now everyone is forced to slow down the completion of their tasks due to them working simultaneously.
The law of diminishing marginal productivity suggests that managers find a marginally diminishing rate of production return per unit produced after making advantageous adjustments to inputs driving production.
This is basically the situation above, but in a professional setting, such as a factory. The more workers that join, the less space and efficiency the original workers have, resulting in lower productivity.
However (of course I’ll add an exception), this law only works in cases where consumers do not change their tastes and preferences in the given product. For example, if workers switch from making small purses to larger ones due to them becoming more trendy (higher demand = profit opportunity), and each of them sews at their separate workstation, they are less likely to stand up to get more resources, and therefore prevent each other from working to their full potential.
If they were making small purses, however, they would have to stand up and collect materials more frequently, which could lead to them decreasing each other’s productivity. Additionally, if more and more workers were crammed into the same factory, the corridor space would decrease, and so would each worker’s personal space, making them less likely to be truly motivated to work in such conditions and sew as many purses as they could.
In conclusion, the law of diminishing productivity is found in daily life as well, not just in economics theory. So the next time your family is altogether in the kitchen during the holidays, make sure to be patient, and remember this law, in order to stay calm and not get too stressed during the holiday preparations.
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