Applying Economic Concepts 7-2
Three Examples of Diminishing Returns
Sport Fishing
British Columbia’s Campbell River, a noted sport-fishing area,
has long been the centre of a thriving, well-promoted tourist
trade. As sport fishing has increased over the years, the total
number of fish caught has steadily increased, but the number
of fish per person fishing has decreased and the average hours
fished for each fish caught has increased.*
Pollution Control
When Southern California Edison was required to modify its
Mojave power plant to reduce the amount of pollutants emitted
into the atmosphere, it discovered that a series of filters
applied to the smokestacks could do the job. A single filter
eliminated one-half of the discharge. A second filter could not
reduce the same absolute amount and hence reduce the total
discharge to zero. Instead, five additional filters were required,
and even then the remaining discharge would still be 3 percent
of the original amount. In other words, increasing the number
of filters leads to diminishing marginal returns in pollution
reduction.