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Increasing and Decreasing Yield
In many cases, the amount of additional or marginal product amount that is brought about by each additional worker in a company is not constant. In other words if a company goes from not having any workers to having just one, the product amount would increase and if then two workers are hired the product amount would double and so forth. In economical terminology the marginal product of the second worker is actually more than that of the first worker.
Look at these facts in terms of costs and benefits. If you have to pay a worker the same salary, you will be glad to know that what you are paying for the first who is producing a certain amount (let’s say 50 units), the second worker is producing more (around 80 units) for the same amount of pay.
This type of situation is know of as growing yield, because the return that is obtained with a given amount increases as successive units of the product is added. However, you will also find that the growing yield is not always permanent.
Consider what would happen if the growing yield ends right away. And then think about what would happen if you added on a third worker. The product would increase, but only a certain amount. Things would then just get worse if more workers were added on.
When this sort of thing happens financial experts call this situation, decreasing yield, because each successive unit of a product, such as work, gives less of an increase of the product than the previous one.