What effect is described by the concept that more variable input is required to produce additional units of output?

The concept that describes the scenario where more variable input is required to produce additional units of output is known as the diminishing returns effect. This principle is a fundamental concept in microeconomics that asserts that when additional units of a variable input (like labor) are added to a fixed input (like machinery or land), the increase in output will eventually start to decline after a certain point.

Initially, adding more variable inputs can lead to increased productivity; however, after surpassing an optimal level of input, each additional unit of the variable input contributes less and less to overall output. This happens because the fixed inputs become a constraint, causing efficiency to decrease. For example, in a factory, adding more workers to a fixed number of machines might initially improve output, but soon, each new worker may have less machine time and space to work effectively, resulting in smaller increases in production.

This effect helps explain why, beyond a certain point, firms might not want to continuously add more of a particular input, as the cost of that additional input may outweigh the incremental gains in output. Understanding diminishing returns is crucial for making informed decisions about resource allocation and efficient production levels.