Law of diminishing marginal return essay

Markets Economists study trade, production and consumption decisions, such as those that occur in a traditional marketplace.

Law of diminishing marginal return essay

Posted on November 13, by Scott Alexander I.

Law of diminishing marginal return essay

Medieval Icelandic crime victims would sell the right to pursue a perpetrator to the highest bidder. Somali judges compete on the free market; those who give bad verdicts get a reputation that drives away future customers.

Law of diminishing marginal return essay

Law is a public good. If you steal my gold, I have some interest in catching you and taking it back, but no more than I do in catching some other poor shmuck and taking his gold.

This is the classic situation where economists usually recommend government intervention. Maybe you live in an area like Somalia or medieval Ireland without a strong centralized government.

Gypsies living scattered in foreign countries have generally wanted to run their own communities by their own rules. But something does stop them from trying to enforce them: So the Vlach Rom — Romanian Gypsies — organize courts called kris which enforce their sentences with threat of banishment from the community.

Kris courts can declare the worst offenders polluted, ensuring their speedy ostracization from Gypsy society. And since non-Gypsies are polluted by default, the possibility Law of diminishing marginal return essay ostracism and forced integration into non-Gypsy society will seem intolerable: The effectiveness of that threat [of ostracism] depends on how easily the exiled gypsy can function outside of his community.

It follows that they are all polluted, unclean, carriers of a contagious disease, people whom no Rom in his right mind would willingly choose to associate with; when and if such association is unavoidable it must be taken with great care.

The gypsy view of gaije, reinforced by the gaije view of gypsies as uneducated and illiterate thieves and swindlers, eliminates the exit option and so empowers the kris to enforce gypsy law by the threat of exclusion from the only tolerable human society.

Amish also live under the authority of a foreign culture and have settled on a similar system, with a twist. The basic unit of Amish society is the church congregation; Amish settlements big enough to support multiple churches will have many congregations mixed together. Amish congregations are nominally democratic, but in practice Friedman calls them dictatorship-like because everyone votes the way the bishop wants.

This makes it a rare remaining example of a polycentric legal system outside anarcho-capitalist fantasies or Too Like The Lightning: Such a system can be viewed as a competitive market for legal rules, constrained, like other competitive markets, to produce about the product that the customers want.

Competitive dictatorship is the mechanism we routinely use to control hotels and restaurants; the customers have no vote on what color the walls are painted or what is on the menu, but an absolute vote on which one they patronize.

They do encounter the same problem as the Gypsies: The Amish have some internal mechanisms to prevent this: Of course, you can still leave the Amish community and go join broader American society. But have you seen broader American society?

There were no public prosecutors; anyone who felt like it could bring a criminal to court and start prosecuting him, but if nobody felt like it then the crime remained unpunished.

Prosecuting took a lot of time and money and was generally a thankless task.

The exotic anarcho-capitalist part comes in as English civil society creates its own structures to work around these limitations. Merchants, landowners, and other people with wealth banded together in mutual-protection-insurance-groups. Everyone in the group would pay a fixed amount yearly, and if one of them got robbed the group would use the money to hire a prosecutor to try the criminal.

Group members would publish their names in the newspaper to help inform thieves whom it was a bad idea to rob. Once a trial was underway, prosecutors would usually cut a deal: The size of the bribe would vary based on how much the offender could pay, the extent of their crime, and the facts of the case and therefore the likelihood of the magistrate choosing hanging vs.

This not only helped tailor the punishment more precisely to the crime, but helped defer the cost of prosecution: What both modern and contemporary commentators seem to have missed is that, however corrupt such arrangements might be from a legal standpoint, they helped solve the fundamental problem of private prosecution.

The possibility of compounding provided an incentive to prosecute-it converted the system into something more like a civil system, where a victim sues in the hope of collecting money damages.

And while compounding might save the criminal from the noose, he did not get off scott free.

Law Of Diminishing Marginal Utility

He ended up paying, to the prosecutor, what was in effect a fine. If an Icelander thought a crime had happened, they would go to court and plead the case themselves. If the court pronounced a guilty verdict, it would demand a penalty from the criminal.

Usually this was a fine paid to the victim; even murders were punished with wergeld.Diminishing return is a further reason for increasing marginal costs because when addition unit of output, the cost of the additional output marginal cost must eventually increase.

Question 4: The relation between average product and marginal product is one of several that reflect the general relation. 1. Explain the law of ‘diminishing law of marginal returns’.

Ans: In economics, diminishing returns refers to progressive decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is increased, while holding the amounts of . Economics (/ ɛ k ə ˈ n ɒ m ɪ k s, iː k ə-/) is the social science that studies the production, distribution, and consumption of goods and services..

Economics focuses on the behaviour and interactions of economic agents and how economies work.

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