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MENTAL MODEL · M3751

Diminishing Returns

Diminishing Returns
BusinessHigh supportMicroeconomics
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Version 1.0.0 · Updated 2026-07-28

CORE DEFINITION

In economics, diminishing returns means the decrease in marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors of production equal (ceteris paribus). The law of diminishing returns (also known as the law of diminishing marginal productivity) states that in a productive process, if a factor of production is increased while others are held constant, the marginal output will eventually decline.

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In economics, diminishing returns means the decrease in marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors of production equal (ceteris paribus).

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When other inputs are held constant, continuously increasing a certain factor will eventually lead to diminishing marginal output, due to the imbalance in the ratio of factors.

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Diminishing_returnsZH · Explicit
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