The Law of Returns in Agriculture and the Processing Industries

People have sometimes believed that while the law of diminishing returns is valid in agricultural production, a law of increasing returns prevails. It took a long time before they realized that the law of returns refers to all branches of production equally. Both in agriculture and in the processing industries, many factors of production are not perfectly divisible. If a plant or enterprise deviates from the optimum combination of the factors employed, it is less efficient than one for which the deviation from the optimum smaller.