Diminishing Returns Calculator

What is Diminishing Returns?

Diminishing returns, also known as the law of diminishing marginal returns, is an economic principle that describes the decrease in the incremental output of a production process as the amount of a single factor of production is incrementally increased, while other factors remain constant. In simpler terms, it means that adding more of one input (e.g., labor or capital) to a fixed amount of other inputs will eventually yield lower per-unit returns. This concept is crucial in understanding the efficiency and productivity of production processes and is widely used in economics and business decision-making.