11-3.3a The law of returns—with the quantity of complementary factors held constant, there always exists some optimum amount of the varying factor

Assuming that the knowledge is kept constant.revisit

“The law of returns states that with the quantity of complementary factors held constant, there always exists some optimum amount of the varying factor. The law that such an optimum must exist can be proved by contemplating the implications of the contrary.” (p. 35)

“According to the law of returns, there is an optimum of proportions of factors, given other factors, in the production of any given product. We shall see that our analysis of factor pricing is based only on this praxeological law and not on more restrictive technological assumptions.” (pp. 455-456)

Related:

• Rothbard’s Law of Returns ignores how changing the configuration of capitals can turn the production process into something qualitatively different—often times the returns become incommensurable with additional input of capital (see, e.g., Ludwig Lachmann):
  • 3-1c2f In tech, most of the value is in the ordering, in the useful configuration of zeroes and ones, which users click to pay for it