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i'm no economist, so i won't pretend to understand it. my perception of this principle is rather simplistic, like this...
a tree drops 20 fruits a day, & if a man A collects all 20, he's gain is 100%. the next day, this tree drops another 20 fruits, but this time another man B joins A to collect them. if everything else being equal, each will collect 10, or 50% of the fruits.
assuming, each man only require 3 fruits a day to etch out a basic living, eg. 1 each for breakfast, lunch & dinner, then both should be happy because they would have their fill, plus 7 extra each as reserve. however, A might be discontented & felt hard done by, because he's so used to having all 20 fruits to himself ie. 3 for daily sustenance plus a massive 17 extra, but now his number has dropped 50%. even if a 3rd person joins in, each should still live comfortably with 6-7 fruits each.
now, imagine the men are doctors in private practice, the tree & fruits are the medical centre & patients, respectively. previously, Dr A gets to see & collect fees from all 20 patients. then Dr B joins the center & A's workload is immediately halved. but note, there is still more than enough patients for both doctors - 10 each, or 3 for sustenance & an additonal 7, for ....er...life's extras.
therefore, i can't comprehend why A, who :
1) has a working wife & grown up children,
2) lives in a bungalow & drives a 5-series,
3) collects rent from several other properties,
4) lectures part-time at university, &
5) professes faith in religion,
is throwing temper tantrums a month before B is scheduled to join the centre, considering the vast amount of fruits he has accumulated during the 10 years that he had monopoly in the practice??
this is how i see the law of diminishing returns operate in private practice. or, maybe it's just plain maths : same pie divided by more people ------> less share each.
but Paul saw it differently :
"For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs." 1 Tim 6:10
Lord, lead me not unto temptation. Amen.
note : law of diminishing returns states that, in a production system with fixed and variable inputs (say factory size and labour), beyond some point, each additional unit of variable input yields less and less additional output. (source)