Law of diminishing returns
Law of diminishing returns, also know as the law of non-proportional returns, states that when an increasing quantity of a factor of production (or group of factors) is used in conjunction with a fixed quantity of complementary factors, eventually a point will be reached where the additional output produced will be less than proportionate to the increased quantities of the input used.[1] This law applies to a given point in time, or in other words assumes a static production process.[1] Overtime changes in technology could cause the point of diminishing returns to be pushed back.
References
- ↑ 1.0 1.1 Reisman, George. "Capitalism: A Treatise on Economics", 1998, page 67.