law of diminishing returns

  

Definition

A concept in economics that if one factor of production (number of workers, for example) is increased while other factors (machines and workspace, for example) are held constant, the output per unit of the variable factor will eventually diminish.

Although the marginal productivity of the workforce decreases as output increases, diminishing returns do not mean negative returns until (in this example) the number of workers exceeds the available machines or workspace. In everyday experience, this law is expressed as "the gain is not worth the pain."


Use this term in a sentence

  • Some products are high on the law of diminishing returns so you must try and get rid of them as quick as you can.

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  • I told him to be careful because The Law of Diminishing Returns talks about how a company will disappear if they don't pay attention to it.

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  • The law of diminishing returns was referenced in the meeting so we had to acknowledge the graph that represented it as well.

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