Diminishing Returns essay



Diminishingreturns popularly termed as the law of diminishing returns or theprinciple of diminishing marginal productivity bases its argumentaround the economic basis of input and production. The law continuesto state that if the input in the production of an item gets anincrease and the other input factors remain as fixed, there will comea point where the additions of the input yield progressively smalleroutput (Hall, 2013). At a certain point in the production chain, anincrease in the input variables will cause a reduction in the outputlevels, reducing gradually. The article in focus explains the lawthat the case where a production line increases one of the variablefactors, and the holds the other input factors at a constant level,there will reach a point where the addition of one more unit of thevariable factor will lead to a diminishing rate of return. Thediminishing rate of return will eventually fall the marginal physicalproduct (Hall, 2013).

Thearticle in summary questions the influx of technological applicationsthat venture under the social media platform, and compares theincreasing amount of applications with the reducing numbers of thepeople signing up to such applications. Facebook is the most popularsmartphone application in the universe. The usage and popularity ofthe application are unmeasured, with businesses, individuals,politicians, and organizations leveraging the services offered byFacebook to their advantage. The social utility enables people toconnect and communicate globally. The popularity of the social mediaapplication pushed developers to come up with other social mediaapplications to beat off the services offered by Facebook. Instagram,Twitter, MySpace, Google+ among other leading social mediaapplications all thrive with a goal to offer the same types ofservices and target the same population such as Facebook does overthe years.

Instagram and Twitter gain new subscribers each day, and Facebookbought Instagram from the bright prospectus future the applicationbrings to the social media platform. Amid the influx of the new appsin the social media provisions, there has been no parallel rise inthe number of total users accessing and manipulating the applications(Gerber,2016).Diminishing returns apply to economics and the profits from thesocial media outlets sure do not increase the number of users doesnot match parallel to the invention of the new application for thesmartphones. The general and full participation per social mediaprovision are diluted with the invention of new apps. It translatesto that the same subscribers look at more applications for lessertime. Consequently, the social media companies operate at a loss andforcing them to continue with the battle to acquire the next big appin a bid to protect their share of the market (Gerber,2016).

Thelaw of diminishing returns makes it troubling for huge operators thatrely on high levels of interaction to come up with ad revenue, suchas Facebook. Additionally, the advertisers focusing on pushing theirads on social media are also at a troubling edge. The advertisershave difficulty getting to their target audience since the usageacross the social media platforms is more diffuse than before, as nosingle app will ever be enough to reach the target customers. Theeffects of the law of diminishing returns do not apply in thestagnant technologies where the techniques of production remainunchanged, but in our scenario of the social media and thetechnological platforms, developers produce a new app every year inaverage. Therefore, the diminishing returns of the social mediaplatforms provide a sure production level if no other productionfactors get a change shortly.


Gerber,R. (2016). ForbesWelcome.Forbes.com.Retrieved 7 June 2016, fromhttp://www.forbes.com/sites/greatspeculations/2014/04/02/law-of-diminishing-returns-hits-social-media-companies/#23933e1566c9

Hall,R. E., &amp Lieberman, M. (2013). Microeconomics:Principles &amp applications.Mason, OH: South-Western Cengage Learning.