law of diminishing returns

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Definition

Noun: - An economic principle stating that adding more of one factor of production, while holding others constant, will eventually yield lower incremental per-unit returns. The law describes a point where the benefit gained from an additional unit of input begins to decrease.

Usage

This term is used primarily in economics and business to describe a state of decreasing productivity or effectiveness. It is often applied when discussing production, investment, study hours, or any process where inputs are increased.

Examples
  • In Economics:
    • The factory experienced the law of diminishing returns when adding more workers to the assembly line only led to a smaller increase in output.
  • In General Context:
    • Studying for ten hours a day might be subject to the law of diminishing returns; after a certain point, your ability to retain information decreases.
Advanced Usage
  • "to hit/encounter the law of diminishing returns": to reach the point where additional effort or investment yields progressively smaller benefits.
    • Our marketing campaign has hit the law of diminishing returns; doubling the budget is unlikely to double new customers.
Variants and Related Words
  • Diminishing returns (noun phrase): The commonly used shortened form of the full law.
    • The project is facing clear diminishing returns on further investment.
  • Returns to scale (noun phrase): A related economic concept dealing with output changes when inputs are scaled.
Synonyms
  • Decreasing returns
  • Declining marginal productivity
Related Phrases
  • Point of diminishing returns: The specific moment or input level where the law begins to apply.
    • We need to identify the point of diminishing returns for this training program.
Noun
  1. a law affirming that to continue after a certain level of performance has been reached will result in a decline in effectiveness